According to analysts, Walt is Disney (NYSE 🙂 is virtually sure to stay in the trend with this quarter's mega-cap recession. However, the technicians point to something strange for a stock that will disappoint on a large scale: the charts suggest that demand has conquered supply.
The stock of the entertainment giant is expected to fall after it was released on Thursday, November 7. Profit is down 35% from the same period a year ago, as the company's huge investment in the 21st Century Fox significantly increased spending on its new TV streaming service, Disney +, continuing to weigh on its performance.
But, if Disney's stock is about to fill up after the release, why is the balance between supply and demand reversed?
On September 26, the stock completed an H&S top when it fell below the neck, the trend line connecting the lows of the pattern. The 200 DMA, however, turned out to be a worthy trailer and pushed the price back above the neckline, inflating the pattern.
A pattern error suggests that the prize will be pulled in the opposite direction, as a coil spring is pulled in the wrong direction. The market mechanics includes a short squeeze and traders who clamber to adjust positions in the new "right" direction.
We can see a few things happening at the same time: the aforementioned support for the 200 DMA prices bounced back above the H&S top neckline (which also escaped a falling wedge pattern, bullish after the previous rise), a closure above the 50 DMA and a new peak in a new uptrend in the short term.
Trading Strategies
Conservative traders must wait for a new peak above July 29, $ 147.15 high, to check whether the upward trend is intact.
Moderate traders can wait for the price to withdraw and find support above the wedge and neck, preferably with a closure above 100 DMA.
Aggressive traders can now take a long position after writing a trade plan that fits their budget.
Trade sample – long position
Admission: $ 132
Stop loss: $ 130
Risk: $ 2
Target: $ 138
Reward: $ 6
Risk: reward ratio: 1: 3
Note: The above is just an example – a single transaction does not prove or refute an analysis. Trading success is measured by statistics.
