Range Tightening in Disney

Published on Friday, 03 February 2012 07:04 Written by Christopher Lynn

New York, February 3rd (TradersHuddle.com) - Shares of Walt Disney Co. (NYSE:DIS) closed the trading session at $38.91 placing the price action in a very tight range, given that calculated support is set at $38.02 and the calculated resistance based on an algorithm of peaks and troughs is set at $40.25

The Walt Disney Company (NYSE:DIS), the largest media company in the world, conducts operations in media networks, studio entertainment, theme parks and resorts, consumer products, and Internet and direct marketing. The Company produces motion pictures, television programs, and musical recordings, as well as publishes books and magazines. Disney also operates ABC radio and television, cable channels and theme parks around the world. Disney owns the most watch and valuable sports network in cable, ESPN. The entretainment company was founded by Mr. Walt Disney in 1923 and its based in Burbank, CA.

Disney's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Disney's price action, as any movement outside its predefined range of $38.02 and $40.25 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $38.02 could spark above average selling. A tiered approach can be a good way to approach starting a position in Disney's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.