DISCA closes above its opening price after recovering from early selling pressure
Discovery Inc. Series A Common Stock (DISCA) Technical Analysis Report for Jul 13, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, DISCA ended Monday at 20.52 gaining $0.29 (1.43%) on high volume, significantly outperforming the S&P 500 (-0.94%). Trading up to $0.65 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. The last time this happened on June 23rd, DISCA actually lost -1.99% on the following trading day. Closing above Friday's high at 20.37, Discovery confirmed its breakout through the prior session high after trading up to $0.55 above it intraday.
Daily Candlestick Chart (DISCA as at Jul 13, 2020):
Monday's trading range has been $1.21 (5.94%), that's slightly above the last trading month's daily average range of $1.00. 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 lower than usual for DISCA.
Two candlestick patterns are matching today's price action, the Bullish High-Wave Candle and the Bullish Spinning Top which are both known as bullish patterns.
Unable to break through the key technical resistance level at 20.89 (R1), the share closed below it after spiking up to 20.92 earlier during the day. The failure to close above the resistance could increase that levels significance going forward.
Though the stock is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
As prices are trading close to July's high at 21.80, upside momentum could speed up should DISCA mark new highs for the month. Trading close to May's low at 18.56 we might see further downside momentum if potential sell stops at the level get triggered.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "2 Consecutive Higher Closes" stand out. Its common bullish interpretation has been confirmed for Discovery. Out of 301 times, DISCA closed higher 51.16% 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 54.49% with an average market move of 0.20%.