In this edition of charting stocks for dummies, we are going to look at a downward channel breakout. Note: This pattern involves similar setups for both positive and negative slopes.
The last edition of CSFD looked at a similar pattern; however, the slope of the channel was not as steep. Generally, the steeper the channel the more volatile a breakout can be.
The initial call was fairly simple. Netflix (NFLX) had already broken out, now we just needed to ride the wave. The $110 price target was created by the top of the downward channel. See my original analysis of this Netflix play.
Over the next 2 days, Netflix soared higher – at one point hitting $119. Now our $100 price target has been met and can act as support now.
Make sure to sign up for my free technical analysis course, to learn more about trading stocks using charts and what to do once your price target has been met.