Bullish Setup Case Study - $NFLX
$NFLX Weekly - 2017 to 2018
Netflix had a consolidation period between 2015-2016 (additional notes) before seeing a breakout in early 2017. The initial breakout was met with more consolidation which formed a key pivot area above. Price ended up slowly breaking through this pivot which ended up giving a nice retest in line with the 21EMA. In the summer of 2017, we finally got a breakout on big volume. This breakout like the others didn't produce much in the short term. We saw a volatility contraction pattern setup form with a retest of the 8EMA. This was a perfect opportunity for a dip buy as the low held that previous pivot perfectly. In late 2017, we once again saw some consolidation form into the 8 and 21 EMAs. In 2018, Netflix took off like a rocket with steady accumulation patterns before finally dying off in the Summer. Though Netflix took years to really pan out for bulls, this is a great example of how one trade can make your year. You could have locked in upwards of +250% with proper risk management, patience, and discipline. Sure, looking back at a chart like this it is easy to say 'hindsight 20/20'. You are entirely correct, hindsight is 20/20. Hindsight also provides us clues in what to look for in future setups. It comes down to studying what works and putting those key principles into practice.
Additional Notes: $NFLX Monthly
Notice how the consolidation looked a little worrying on the weekly chart as we almost flipped into a red trend a few times however on the monthly chart this looked like an orderly pullback. Playing pullbacks and breakouts that favor the long term trend and the short term trend combined offer a higher probability of success.