DISCA breaks below key technical support level
Discovery Inc. Series A Common Stock (DISCA) Technical Analysis Report for Jun 26, 2020 | by Techniquant Editorial Team
Moving lower for the 3rd day in a row, DISCA finished the week -8.53% lower at 20.26 after losing $1.00 (-4.7%) today, strongly underperforming the S&P 500 (-2.42%). Today's close at 20.26 marks the lowest recorded closing price since May 13th. Closing below Thursday's low at 20.82, the market confirmed its breakout through the prior session low after trading up to $0.87 below it intraday.
Daily Candlestick Chart (DISCA as at Jun 26, 2020):
Friday's trading range has been $1.22 (5.8%), that's slightly above the last trading month's daily average range of $1.14. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DISCA.
One bearish candlestick pattern matches today's price action, the Black Candle.
Prices broke below the key technical support level at 20.71 (now R1), which is likely to act as resistance going forward. The last time this happened on Wednesday, DISCA lost -2.12% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Further selling could move prices lower should the market test May's nearby low at 18.56.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "3 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Discovery. Out of 147 times, DISCA closed higher 52.38% 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 53.74% with an average market move of 0.66%.