Disney Is Attempting to Overcome Its Yearslong Slide

After a promising start, Walt Disney (DIS) shares drifted lower in 2023.

By October, the media giant hit its yearly lows. It was down over 60% from its March 2021 all-time high.

We last checked out DIS in July (red arrow in the chart below). At the time, it hadn’t been able to sustain any buying momentum during its two-year-plus downtrend.

Yet momentum returned late last year. And DIS broke higher in November, before consolidating through December.

And the stock has shown some recent positive signs. So today, I want to check what’s in store from here…

A Change in Trend

On the left-hand side of the chart, you can see DIS’s sharp rally at the start of 2023. But DIS then resumed its long-term downtrend.

Walt Disney (DIS)

Source: eSignal

Buying momentum in the Relative Strength Index (RSI) steadily fell.

The RSI reversed from overbought territory down through support (green line). Then it dropped into the bottom half of its range, where it remained for the majority of DIS’s downtrend.

The other thing you’ll notice is the MACD (Moving Average Convergence/Divergence) at the bottom of the chart (below the RSI).

The MACD (blue line) peaked and bearishly crossed beneath the signal (orange) line. The MACD also stayed in its lower range during DIS’s fall.

Yet coming into November, the chart shows a clear change in the trend.

Take another look:

Walt Disney (DIS)

Source: eSignal

DIS rallied up to its peak at ‘A’ along with several bullish signals:

1. The RSI broke through resistance (green line) and gained traction in its upper band.

2. The 10-day Moving Average (MA, red line) crossed and accelerated above the 50-day MA (blue line) at a steep angle. That showed the strength of buyer demand.

3. The MACD line crossed above the signal line with both then tracking higher.

Since hitting that peak at ‘A,’ though, buyer momentum is being tested…

The MAs have recently converged. The RSI has been fighting to hold support (red circle).

The MACD has also fallen, with the MACD and signal lines tracking on top of each other right at the zero (neutral) line.

So with DIS at a tipping point, what will determine its direction from here?

Building Positive Momentum

Having retested and held support, the RSI needs to keep building momentum for DIS to resume its November rally.

The RSI rising towards oversold territory would likely see DIS retesting its recent short-term high on November 24 ($96.51) at ‘A.’

A break above that level (orange line) could set off the next leg of DIS’s rally.

The other thing to watch is the MACD.

We’re looking to see if the MACD line (blue) accelerates above the signal line (orange).

That would mean both are tracking higher like they did 12 months ago and more recently in November. A move like this would add further weight to any re-emerging up trend.

And it would add another layer of confirmation for a potential long trade.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict

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