Netflix (NFLX) shares surged after CEO Reed Hastings confirmed that Netflix service is live in 130 new countries today. Now available in 190 countries, the company is aiming at also breaking into the Chinese markets. The keynote speech at CES 2016 also confirmed that the language offerings will now include Arabic, Korean, Simplified and Traditional Chinese to the 17 languages it already supports.
Price action on the NFLX daily chart shows the bearish butterfly pattern that was identified last month. Point D was targeted with the 161.8% Fibonacci expansion level of the X to A leg and the 200.0% Fibonacci expansion level of the B to C leg. The reversal pattern saw price drop just below the $105 handle.
Today’s bullish move appears to be signaling the end of the reversal pattern and we could see further gains if price is able to have consecutive daily closes above the 50-day SMA, which currently trades around the $117 handle.
If the rally is short-lived, only a break below the $101 level would open the door for a deeper correction. Deeper support may target the low at $85 level
The Trade: Buy NFLX at $117.50, with a stop loss at $114.50 and a take profit at $123.50. The Risk/Reward Ratio is 1:2