DISCA breaks below key technical support level
Discovery Inc. Series A Common Stock (DISCA) Technical Analysis Report for Aug 12, 2020 | by Techniquant Editorial Team
DISCA finished Wednesday at 21.82 losing $0.66 (-2.94%), strongly underperforming the S&P 500 (1.4%). The bears were in full control today, moving the market lower throughout the whole session. Closing below Tuesday's low at 21.95, Discovery confirmed its breakout through the prior session low after trading up to $0.14 below it intraday.
Daily Candlestick Chart (DISCA as at Aug 12, 2020):
Wednesday's trading range has been $1.03 (4.52%), that's slightly above the last trading month's daily average range of $0.84. Weekly volatility is also higher, being above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for DISCA.
In spite of a strong opening the share closed below the previous day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle.
Prices are trading close to the key technical support level at 21.04 (S1). Prices broke below the key technical support level at 21.91 (now R1), which is likely to act as resistance going forward. The last time this happened on August 7th, DISCA actually gained 3.81% on the following trading day. After having been unable to move lower than 21.95 in the prior session, the stock found buyers again around the same price level today at 21.81.
Crossing below the upper Bollinger Band, prices have lost at least some of their upward momentum in the short-term and might now be heading back down towards the mean of the Bollinger Bands at 21.34.
The market shows strength in the short-term supported by its long-term uptrend with only the medium-term trend being bearish.
Selling could speed up should prices move below the nearby swing low at 20.88 where further sell stops might get triggered.
Among the 10 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close crossed below the upper Bollinger Band" stand out. Its common bearish interpretation has been confirmed for Discovery. Out of 79 times, DISCA closed lower 56.96% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after nine trading days, showing a win rate of 53.16% with an average market move of -0.72%.