Takeaways
- Shares in The Walt Disney Company were treading water to start the week ahead of the entertainment giant's earnings report, due for release before Wednesday’s opening bell.
- The stock’s price is up from the lower end of a descending range, but it remains below both the moving averages of 50 and 200 days, which formed the ominous Death Cross last month.
- Investors should watch crucial support levels on Disney's chart around $85 and $79, while also monitoring vital resistance levels near $100 and $107.
The Walt Disney Company’s (DIS) shares were flat to begin the week, ahead of the entertainment giant releasing its earnings report before Wednesday’s opening.
Analysts at UBS expect that the company’s theme park, new cruise ship, and sports advertising will support the fiscal second quarter results. The bank did warn that recession risk could slow revenue.
Disney shares are up nearly 16% from last month’s low. However, they are still down 17% since the beginning of the year. This is due to concerns about the impact tariffs will have on consumer spending, and the increasing competition among streaming services that could affect Disney+ subscriber growth.
Below, we examine Disney’s chart. We use technical analysis in order to identify key price levels which investors will be monitoring.
Descending Channel
Disney shares have oscillated in an orderly descending pattern since March last year. They have tagged the pattern’s upper- and lower-trendlines on numerous occasions.
The stock price has risen from the lower range in the pattern, but it remains below the 50-day and 200-day moving averaages, which formed ominous death crosses last month. The relative strength index (RSI), which measures momentum, surpassed the 50 threshold in the last week. This is a sign of improving momentum before the company’s quarter results.
Let’s identify critical support and resistance levels in Disney’s chart amidst conflicting technical signals.
Important Support Levels to Watch
Pre-earnings selloffs could cause a fall of up to $85. This area may provide support near an upward trendline connecting the mid-April dip to last year’s swing low in August and a brief consolidation period that preceded the stock’s November 2023 gap.
The bulls’ inability to defend this level opens up the possibility of a decline towards $79, which is currently just below the lower trendline of the descending channel. Investors could look for opportunities to buy at this point near several troughs which appeared on the chart in Oct 2023.
Key Resistance Levels for Monitor
Continued buying ahead of company results could lead to a climb towards the psychological $100 level. The shares could face selling pressure near the 200-day MA, and a horizontal bar that links a range corresponding trading activity in the chart going back to February of last year.
A close above the level may lead to a move up to $107. Investors might decide to lock in their profits near a trendline connecting a series troughs formed on Disney’s chart from February last year to January this year.
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As of the date of this article, the author owns none of the above securities.
