DIS Stock: Patience & Discipline Could Pay Off
The most difficult aspect of every investment strategy is waiting for that opportune time when all the signals come together and align, suggesting that a move is highly likely to develop. This requires patience and discipline.
Patience and discipline have their virtues. As a result, I am returning to follow up on Walt Disney Co (NYSE:DIS) stock, because a technical price pattern I am watching is approaching completion.
I first outlined this pattern on January 26, 2018, in a publication titled “Walt Disney Stock Is Setting Up for an Explosive Move.”
The pattern in question is highlighted on the following Disney stock chart.
Chart courtesy of StockCharts.com
The pattern highlighted on the DIS stock chart is a triangle. Triangle patterns are characterized by price action depicted by a sequence containing a series of lower highs and higher lows.
Capturing this pattern was accomplished by connecting the peaks and troughs that were created by the price action. The end result is two converging trend lines that produce a triangle price pattern.
These trend lines not only capture the pattern but also define where price resistance and price support reside. This is important information because once Disney stock escapes this pattern, a powerful move in that direction is expected to follow.
The reason why a powerful move is expected to follow is because triangle patterns are known to produce explosive moves once the stock price manages to escape them. The power generated by this pattern is a result of traders positioning themselves on either side of support and resistance in anticipation of a breakout.
As the pattern develops, the range between support and resistance continues to contract and draws attention to it. The size of this pattern is also drawing attention to it.
This triangle pattern is approaching three years in development, making it a fairly large pattern. This suggests that a fairly large move is expected to follow once Disney stock escapes the parameters that define this pattern.
DIS stock is currently attempting to break out of this pattern, so my attention is piqued because I believe it is only a matter of time before it succeeds and higher Disney stock prices prevail.
Breaking out of this pattern would set off a series of other signals, reinforcing the notion that much higher DIS stock prices are likely to follow.
These signals are highlighted on the following Disney stock chart.
Chart courtesy of StockCharts.com
This DIS stock chart highlights a wave structure and an influential momentum indicator that has been supporting it.
The wave structure contains impulse waves and consolidation waves. They have been responsible for creating and sustaining the bullish trend in Disney stock that began in March 2009, after the financial crisis.
The waves highlighted in green are the impulse waves. They capture the stage in a bullish trend when a stock sustains a progressive move toward higher prices.
The waves highlighted in purple are the consolidation waves. They capture the stage in a bullish trend when the stock price corrects and refrains from advancing.
The triangle price pattern currently in development doubles as a consolidation wave. Consolidation waves are very important in the development of a bullish trend because they create the necessary conditions so an advancing impulse wave can follow. This suggests that, when the triangle pattern is complete, a new advancing impulse wave will follow.
The development of an impulse wave will be confirmed by the moving average convergence/divergence (MACD) indicator.
MACD is a trend-following momentum indicator that distinguishes whether bullish or bearish momentum is influencing the trading action in a stock. Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
Momentum is a powerful force because a sustained move in either direction cannot occur unless the applicable level of momentum is supporting it. This is why the waves within this wave structure have coincided with signals generated by the MACD indicator.
For instance, every bullish MACD signal has coincided with an impulse wave. Additionally, every bearish MACD signal has coincided with a consolidation wave. There is nothing to suggest that this correlation is going to end anytime soon.
Currently, the MACD signal lines are converging and a bullish MACD cross is likely going to be generated in the weeks ahead—especially if the triangle pattern is resolved in a bullish manner. Both these indications will suggest and confirm that much higher Disney stock prices are likely to follow.
Disney stock is on the verge of completing a large technical price pattern. Once this pattern is resolved, an explosive move toward much higher DIS stock prices is likely to follow.