DISCA breaks back below 100-day moving average
Discovery Inc. Series A Common Stock (DISCA) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, DISCA ended the week 1.41% higher at 30.21 after losing $0.12 (-0.4%) today on low volume, underperforming the S&P 500 (0.18%) ahead of tomorrow's Presidents' Day market holiday. Closing within the prior day's range, prices failed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (DISCA as at Feb 14, 2020):
Friday's trading range has been $0.47 (1.55%), that's below the last trading month's daily average range of $0.68. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DISCA. Prices continued to consolidate within a tight trading range between 29.85 and 30.60 where it has been caught now for the last three trading days.
In spite of a strong opening Discovery closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bullish candlestick pattern matches today's price action, the Bullish Hikkake Pattern.
Prices are trading close to the key technical support level at 29.89 (S1). The market closed back below the 100-day moving average at 30.22. After having been unable to move lower than 30.02 in the previous session, the stock found buyers again around the same price level today at 30.01. The last time this happened on February 3rd, DISCA gained 2.02% on the following trading day.
The share shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Buying could accelerate should prices move above the close-by swing high at 30.60 where further buy stops might get activated. With prices trading close to this year's low at 29.07, downside momentum could speed up should DISCA break out to new lows for the year.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Discovery. Out of 324 times, DISCA closed higher 53.70% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 54.01% with an average market move of 0.72%.