Watching Netflix -- for a Short Sale

I am stalking a sell setup in Netflix (NFLX) for several reasons. First, this stock has been overdone to the upside for quite some time, although it has not fired off any sell signals until recently. Let us take a look at what is happening there. On the daily chart below, we have seen the five-day exponential moving average cross under the 13-day EMA. That is a bearish signal. We have also seen the stock price drop below the 50-day simple moving average -- another bearish indication. The stock has taken out a prior swing, indicating a trend reversal to back down. Finally, the chart has a downside gap to fill. (While I don't always see this happen, many traders watch for it.)

NFLX Daily Source: Dynamic Trader View Chart » View in New Window »

I am watching two areas for a possible short in this stock. The first zone comes in at $175.68-$178.74. The second zone comes in at $181.82-$182.52. These areas were calculated by running Fibonacci price retracements of prior swings along 100% projections of prior rally swings that I have illustrated on the daily chart. There is also one minor Fibonacci extension included in Zone 1....176 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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