Walt Disney Co (NYSE: DIS) was falling slightly lower on Tuesday, in tandem with the general market, which saw the S&P 500 ticking over 1% lower amid the continued fallout from last week’s Federal Reserve meeting, which sparked an uptick in concern over the economy.
The amusement park and streaming giant is down 32% since opening the trading day on Feb. 9, in the wake of ongoing legal battles initiated by Florida Gov. Ron DeSantis. The stock has been trading in a fairly consistent and steep downtrend since May 10, shortly after a death cross appeared on Disney’s chart.
A downtrend occurs when a stock consistently makes a series of lower lows and lower highs on the chart.
The lower lows indicate the bears are in control, while the intermittent lower highs indicate consolidation periods.
Traders can use moving averages to help identify a downtrend with descending lower time frame moving averages (such as the eight-day or 21-day exponential moving averages) indicating the stock is in a steep shorter-term downtrend.
Descending longer-term moving averages (such as the 200-day simple moving average) indicate a long-term downtrend.
The Disney Chart: Disney’s most recent lower high within its downtrend was formed on Thursday at $83.67 and the most recent confirmed lower low was printed at the $81.64 mark the day prior. On Tuesday, Disney gapped down slightly to start the trading day and continued to fall lower intraday, which had the stock looking to print a bearish kicker candlestick.
- If the bearish kicker candlestick is recognized, Disney is likely to trade lower again on Wednesday. The second most likely scenario is that Disney begins to trade sideways on decreasing volume, to consolidate the recent sharp downturn.
- Bullish traders want to see Disney hold above $79.75 or the stock will print a new three-year low. If that happens, at least a temporary bounce is likely to follow because Disney’s relative strength index (RSI) is measuring in at about 35% and heading toward oversold territory.
- Disney has resistance above at $80.17 and at $85.45 and support below at $79.07 and at the psychologically important $70 area.
Produced in association with Benzinga
