close icon

The Elliott Wave Pattern behind Disney ‘s 30% Gain

Depending on the amount of time a position is kept open, traders can be separated into three categories: scalpers, day traders and position traders. The third group is known for holding a position for weeks, months or more if required. That group was recently rewarded by the sharp surge in Walt Disney stock.

A little over a year ago, in March 2018, the daily chart of DIS revealed a well-known Elliott Wave formation known as a triangle. Disney stock was in an uptrend prior to it and since triangles are continuation patterns, we thought a new all-time high is on the cards once the pattern was completed.

disney stock elliott wave analysis

Triangles consist of five sub-waves moving sideways. Waves (a) and (b) were simple a-b-c zigzags, while waves (c), (d) and (e) were w-x-y double zigzags. Back in March 2018, when this chart was published, we though that as long as the stock traded above $96.20, a bullish reversal for the start of wave V up can be expected.

$96.20 wasn’t a randomly picked level – in a triangle wave (e) cannot cross the end of wave (c). In the same time, the anticipated wave V was supposed to exceed the previous all-time high of $122.08 reached by wave III in 2015. With the stock hovering around $100, the risk/reward ratio was very favorable for the bulls.

Disney Stock – How the News Fits the Pattern

Earlier this month Disney announced that it is ready to offer its own streaming service to compete with the likes of Netflix and Amazon. Following the news, the stock shot up to $132.69 to reward the bulls’ patience.

Disney stock climbs to new all-time high

When the entire stock market was crashing in December 2018 the price of Disney stock fell to $100.46. However, $96.20 survived and all traders had to do was stick to the plan and wait. A reasonable entry level near $100 a year ago, translates into an annual return of ~30% today, not counting dividends.

So far so good, but what can we expect from Disney going forward? According to the Elliott Wave theory, triangles precede the last wave of the larger sequence. This doesn’t mean we should expect a crash right away. In fact, Disney seems well on its way to $150 a share. It only means the stock carries a lot more risk than potential reward near $130. The time to be greedy is over. The time to be careful has arrived.

Did you like this analysis? Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Avoiding the 54% Crash in Brookfield Partners

When we last wrote about Brookfield Partners, the stock was hovering around $44 a share. That was on July 27th, 2019. Back then we though the price can reach $50, but instead of celebrating, the bulls should be getting ready to leave. The reason for our skepticism wasn’t some special insight into the company’s operations…

Read More »

Alphabet Stock To $1700 and… Below?

Similarly to the market at large, Alphabet stock felt the tremors caused by the coronavirus panic. The Google parent’s share price fell from $1531 to $1009 between February 19th and March 23rd. One of the biggest and strongest companies in the world lost 34% of its value in a little over a month. However, thanks…

Read More »

Sidestepping the 55% Crash in Steel Dynamics Stock

It’s been a little over four months since we wrote about Steel Dynamics. On January 16th, the stock was hovering around $33 a share. The price was down 37% from its May 2018 peak at $52.10. Yet, despite the reduced price, we thought investors would be better off avoiding the name. Our bearish opinion was…

Read More »

Omnicom Bears Face Strong Fibonacci Support

Yesterday, we talked about Interpublic and how Elliott Wave analysis warned us about its stock’s collapse two years in advance. Today, we are going to focus on Omnicom, which looked vulnerable to us in March 2018, as well. Omnicom rose from $20.09 to $89.66 between March 2009 and December 2016. The stock took full advantage…

Read More »

Two Years Ahead of Interpublic ‘s 55% Collapse

Interpublic and Omnicom used to be the giants of the advertising world. In the old economy, their competitive advantages seemed indestructible. Then, the Internet revolution came along and Facebook and Google created a lot of problems. However, their stocks were still making new highs until two years ago. Interpublic stock, for instance, was hovering around…

Read More »

Nestle Set to Complete a Pattern it Started in 2003

Nestle S.A. is one of the largest companies in the world and the biggest food and drink producer by revenue. The company is headquartered in Switzerland and went public in 2001. The stock’s all-time low was reached in March 2003, when it fell to CHF 23.32 a share. Seventeen years later now, Nestle stock is…

Read More »

Bulls to Lift Mondi Stock to New Highs

We first wrote about Mondi plc, the paper and packaging company, almost a year ago. On May 5th, 2019, the stock was hovering above 1700 pence per share. Despite being down 25% from its all-time high already, we thought it was too early for investors to buy the dip. Our pessimism was based not on…

Read More »

More analyses