• Disney trades weaker after market hours

• Trend signals point to higher highs

• Q1 earnings due on Wednesday after market close

 

Disney’ stock traded lower by 1.06% after market hours following a rally to a nine-month high of 99.20 on Tuesday. Despite the cautious sentiment, the stock seems to have completed a short pennant formation ahead of the company’s earnings release, which is theoretically a signal of a positive trend continuation.

The RSI and the stochastics are close to overbought levels. Hence, the price could trim some of its gains before heading towards the 61.8% Fibonacci retracement of the February-October 2023 downtrend at 102.75. A move higher and above May’s high of 103.82 could pick up steam towards the 108.00 region, as there are no major obstacles to that level.

If the bears drive the price below the 96.50-97.00 restrictive zone, the 20-day exponential moving average (EMA) may cool down selling forces around the 95.00 number ahead of the 50- and 200-day EMAs. An extension below the latter and the 91.45 number, where the tentative support trendline from October’s low is placed, could cause a steeper negative correction towards January’s low of 88.60.

In brief, Disney’s stock could come under pressure at the start of the US open, though given the encouraging trend signals, any declines could be temporary unless the bears squeeze the price below 96.50.