DISCA still stuck within tight trading range
Discovery Inc. Series A Common Stock (DISCA) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
DISCA finished the month unchanged at 21.10 after edging lower $0.05 (-0.24%) today, strongly underperforming the S&P 500 (0.77%). Trading up to $0.37 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. Closing within the prior day's range, prices missed to decisively move beyond the previous day's trading range in a lackluster session.
Daily Candlestick Chart (DISCA as at Jul 31, 2020):
Friday's trading range has been $0.42 (1.99%), that's far below the last trading month's daily average range of $0.76. Weekly volatility is also lower, being below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DISCA. Prices continued to consolidate within a tight trading range between 20.19 and 21.24 where it has been caught now for the whole last trading week.
During the whole day, prices traded within the prior day's range, unable to trade above the previous day's high or below the prior day's low forming an Inside Bar. Additionally, one bearish candlestick pattern matches today's price action, the Hanging Man.
After trading down to 20.69 earlier during the day, the stock bounced off the key technical support level at 21.04 (S1). The failure to close below the support could increase that levels significance as support going forward. When prices bounced off a significant support level the last time on July 24th, DISCA actually lost -1.28% on the following trading day.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Buying might accelerate should prices move above the close-by swing high at 21.24 where further buy stops could get activated. Selling might speed up should prices move below the nearby swing low at 20.55 where further sell stops could get triggered. As prices are trading close to July's high at 22.22, upside momentum might accelerate should Discovery mark new highs for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for Discovery. Out of 451 times, DISCA closed higher 56.10% 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 51.22% with an average market move of 0.25%.