We had a fun trade today in NFLX, but I wanted to walk our subscribers through the play and why it was such a high-probability winner, which I kept emphasizing in the room before it went.
Let’s start with this chart about an hour into Thursday’s trading session. This is 5-minute bars on NFLX going back two and a half days. From this chart alone, do you see anything special:
I would say that there is nothing special to look at here.
Now, let’s instead add a proprietary tool that we have at Tradesight, which are some key support and resistance points known as Gap Fill Threshold levels. We have these each day AHEAD of the market open. You get one Upper level above the prior day’s close and one Lower level below the prior day’s close. If you overlay these lines and look back to the prior session, we had gapped up at A to this level and immediately came in, and then we moved down EXACTLY to the lower level at B and held:
We later broke that level at C, which led to a trade. The key here is that on the new session (today); INSERT INTO `wp_posts` (`ID`, `post_author`, `post_date`, `post_date_gmt`, `post_content`, `post_title`, `post_category`, `post_excerpt`, `post_status`, `comment_status`, `ping_status`, `post_password`, `post_name`, `to_ping`, `pinged`, `post_modified`, `post_modified_gmt`, `post_content_filtered`, `post_parent`, `guid`, `menu_order`, `post_type`, `post_mime_type`, `comment_count`) VALUES we rallied up to that level early and stalled right at it at point D.
From there, we proceeded to form a cup and handle formation against the level, which is always a great pattern for breakouts as the market consolidates against resistance ahead of the move. This is even more meaningful when it lines up against a key level like this:
Over lunch, it proceeded to wind the energy up by trading flat against the Level, which made the trade potentially more and more powerful:
When it finally went, we have a $67 trigger that ran $1.50 in ten minutes on heavy volume:
This is because the professional technical traders are watching this pattern for exactly all the right reasons.
Thursday was a huge trading day for us, as you can see by clicking here. NFLX was one part of the reason why.
