Disney (DIS) has experienced a notable rebound after a downtrend, recently gapped up on 11/14/24, and started forming a “rising wedge pattern.”
A rising wedge pattern is a technical analysis chart pattern that signals a “potential” reversal in an upward price trend. The defining characteristics of this pattern typically include:
- Converging Trend Lines: The pattern consists of two upward-sloping trend lines that converge over time. The support line (lower trend line) rises more steeply than the resistance line (upper trend line)
- Price Movement: Prices move within the narrowing channel created by these trend lines.
- Volume: Typically, there is a decrease in trading volume as the pattern forms.
- Bearish Reversal: The rising wedge pattern is considered a bearish pattern, indicating that the upward trend “may” be losing momentum and a potential reversal to the downside is likely.
DISNEY (DIS) – Daily Chart
Above, we can see the rising wedge pattern forming after the November 14th gap up, a break down/close below the rising support line on December 3rd, and price drifting lower.
The “measured move profit target” for a breakdown out of a rising wedge pattern is typically calculated by measuring the height of the wedge and projecting that distance downward from the point of the breakout. Here’s how you can do it:
- Identify the height of the wedge: Measure the vertical distance between the highest point of the wedge (top trend line) and the lowest point (bottom trend line).
- Project this distance downward: From the point where the price breaks below the bottom trend line, measure the same distance downward.
Here, we might approximate a potential “measured move” of around $10.00 should the stock continue lower over time, measuring the highest and lowest points of the wedge trendlines ($118 – $108 = $10.00) , and then subtracting this $10.00 from around the breakout area of $117 ($117 – $10 = $107) – or price potentially moving down over time to around this $107 ish level.
Of note, this potential $107.00 “measured move” level also coincides technically around the upper horizontal “gap up window” line($108.40), which can also serve as a potential support area below. So, traders may want to expand a potential measured move below to around the general targeted area of $109 to $107 ish.
Also, if Disney (DIS) price halts its decline and begins to rise before reaching the potential measured move target area, one might consider looking again for bullish opportunities around the $118 – $119 range should the DIS price move and close above these levels.
You don’t have to stick to manually spotting trends when you have Market Rover in your back pocket to help you do the heavy lifting!
Happy Trading!
