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The market continues to grapple with elevated volatility as traders react to mixed signals from Washington. Recent tariff adjustments have stirred uncertainty among investors, with tech stocks seeing a short-lived bounce before fading.

While the broader market struggles for direction, NFLX has emerged as a leader, showing resilience and relative strength in an otherwise cautious environment.

This sentiment-driven market has placed a premium on stocks with strong technical setups and catalysts, and NFLX fits the bill perfectly as we approach its earnings announcement.

NFLX’s Technical Setup

Netflix stands out for its impressive technical setup, making it one to watch closely this week.

Let’s dive into the key factors driving this opportunity:

1. Hourly Squeeze: Coiling for a Potential Move

NFLX’s hourly chart is currently in a squeeze, signaling that volatility has contracted, and the stock is consolidating.

What Is a Squeeze?

A squeeze occurs when Bollinger Bands contract inside the Keltner Channels, indicating a period of low volatility.

Think of it as a spring being compressed—the longer the compression, the more powerful the move when the squeeze fires.

The hourly squeeze on NFLX suggests that energy is building up for a potential breakout.

With earnings just days away, this setup could lead to explosive momentum in the short term.

2. Stacked EMAs: A Bullish Signal

NFLX’s weekly chart shows stacked exponential moving averages (EMAs)—a hallmark of a strong bullish trend.

What Are Stacked EMAs?

Stacked EMAs occur when shorter-term EMAs (e.g., 8-day, 21-day) align above longer-term EMAs (e.g., 50-day, 200-day). This alignment indicates that buyers are firmly in control, and the stock is trending higher across multiple timeframes.

For NFLX, stacked EMAs reinforce the bullish case, showing that momentum remains strong even as the broader market struggles.

3. Relative Strength: Leading While Others Lag

One of the most compelling aspects of NFLX’s setup is its relative strength. While major indices like the S&P 500 and Nasdaq are down significantly this year, NFLX has outperformed, trading near its 52-week high of $1064.50.

Why Does Relative Strength Matter?

Relative strength measures how a stock performs compared to the broader market. When a stock outperforms during periods of market weakness, it signals institutional support and resilience. This is often a precursor to future upside.

NFLX has been a clear leader in a struggling market, making it an attractive candidate for traders looking to capitalize on momentum ahead of its earnings report.

Your Action Plan

Yesterday, I initiated a position in NFLX using calls that expire this week. The idea they run up before its earnings release. I’m betting that there is some short covering and momentum ahead of Thursday.

This setup is a textbook momentum pre-earnings trade, with a strong technical backdrop of an hourly squeeze, stacked EMAs, and exceptional relative strength. NFLX is positioned for a potential move higher, but as always, trade responsibly—position size appropriately, and have a plan to exit.

And remember, gang, if you’re looking for a faster way to catch explosive moves then you’ll want to learn about my Opening Bell Aftershocks strategy.

It is built for high-probability setups around earnings season.

Click here to learn how to trade Opening Bell Aftershocks today.