Technical Analysis – Disney takes a breather near record highs ahead of earnings

Christina Parthenidou, XM Investment Research Desk

Disney’s stock is taking a break around its fresh record high of 190.50 in the four-hour chart, waiting for the next impetus to drive its almost one-year-old rally to uncharted waters ahead of its earnings release.

The RSI and the fast Stochastics warn that a downside correction could be reasonable as the indicators have exited the overbought territory. However, with the price trading comfortably above its simple moving averages (SMA) and the Ichimoku cloud, a freefall below 183.30 and beneath the red Tenkan-sen line could upset traders. If that turns out to be the case, the stock may seek shelter somewhere between its 20- and 50-period SMAs and the surface of the cloud seen within the 179.00 – 175.75 zone.

Otherwise, if the famous international entertainer finds new buyers above 190.59, the 161.8% Fibonacci extension of the latest down leg at 197.34 may next attract attention ahead of the 200 round-level.

In brief, Disney’s stock is neutral in the very short-term and bullish in the broader picture. A decisive close above 190.59 would upgrade the outlook in both timeframes.