Yahoo Finance

Key Takeaways

• Shares in The Walt Disney Company were treading water to start the week ahead of the entertainment giant's earnings report, due for release before Wednesday’s opening bell.

• The stock’s price has rallied from the lower range of a descending channel, but remains below both the 50- and 200-day moving averages, which formed an ominous death cross last month.

• Investors should watch crucial support levels on Disney's chart around $85 and $79, while also monitoring vital resistance levels near $100 and $107.

Shares in The Walt Disney Company (DIS) were treading water to start the week ahead of the entertainment giant's earnings report, due for release before Wednesday’s opening bell.

Wall Street coverage remains mostly bullish on the stock, with analysts at UBS expecting resilience in the company’s theme parks, new cruise ship and sports advertising to underpin fiscal second quarter results. However, the bank cautioned that recession risks could slow revenue.

Disney shares are nearly 16% above last month’s low, though they remain down about 17% since the start of the year, amid concerns about the impact of tariffs on consumer spending and increasing competition in streaming services affecting Disney+ subscriber growth.

Below, we take a closer look at Disney’s chart and apply technical analysis to point out crucial price levels that investors will likely be watching.

Descending Channel

After reaching a two-year high in March last year, Disney shares have oscillated within an orderly descending channel, tagging the pattern’s upper and lower trendlines on several occasions since that time.

More recently, the stock’s price has rallied from the lower range of the pattern but remains below both the 50- and 200-day moving averages, which formed an ominous death cross last month. Meanwhile, the relative strength index (RSI) reclaimed the 50 threshold last week to signal improving momentum ahead of the company’s quarterly results.

Amid conflicting technical signals, let’s identify crucial support and resistance levels on Disney’s chart.

Crucial Support Levels to Watch

Pre-earnings selling could see a fall to around $85. This area on the chart may provide support near a trendline that connects the mid-April dip, last year’s August swing low, and a brief period of consolidation that preceded the stock’s November 2023 gap.

The bulls' failure to defend this level opens the door for a decline to $79, currently just below the descending channel’s lower trendline. Investors may seek buying opportunities at this location near several troughs that developed on the chart in October 2023.