Disney Stock Consolidates Big Break Out: What's Next?

Walt Disney Co DIS has been both a COVID-19 pandemic stock pick for its Disney+ streaming service and a reopening play as its theme parks return to full capacity and cruise ships set sail.

Disney brought in massive revenue with the debut of “Black Widow” last weekend and on Wednesday confirmed another season of its popular “Loki” streaming series. The company also raised prices for its ESPN+ channel.

On Monday, options traders piled into the stock after it broke up bullish from a pattern it had been trading in since March 10. After the big 4% move, the stock has begun consolidation.

See Also: How to Buy Disney Stock & Where to Buy It

The Disney Chart: Disney’s stock had a massive break out Monday when it bust through both a descending trendline and shot straight through a resistance level at $182.79. On Tuesday and Wednesday, Disney’s stock began a period of consolidation, overtop of resistance, and is possibly forming a bull flag pattern on the daily chart.

There are two lower gaps on Disney’s chart, one between $158 and $168 and another between $128 and $133. Because gaps fill 90% of the time it is likely Disney’s stock will one day trade down at those levels, but because it is currently trading so far above the gaps, and looks bullish, it is unlikely to happen anytime soon.

Disney is trading above both the eight-day and 21-day exponential moving averages (EMAs), and the eight-day EMA is trending above the 21-day EMA, both which are good signs for the bulls.

The stock is also trading above the 200-day simple moving average which indicates overall sentiment in Disney is bullish. Tuesday and Wednesday’s sideways price action allowed for all three moving averages to catch up to the stock price which is also a bullish sign.

Bulls want to see Disney’s stock break up from either the daily or four-hour bull flag pattern and for continued momentum to push the stock up over its next resistance level at $191.25. If it can regain the level as support, it has room to make a run back toward its all-time high of $203.02.

Bears want to see sellers come in and drop the stock below a support level at the $182.79. If Disney’s stock was to lose the level as support it could retest the $176 area.

DIS Price Action: Disney was trading up 0.46% at $184.13 on Thursday morning.