Disney (DIS) shares have been advancing off their October lows last year in a steady stair-step series of higher highs and higher lows.

The price action over the last several tradings sessions, however, reflects a loss in upward momentum. The technical indicators are suggesting the stock is due for a pullback.

The daily chart shows the stair-step pattern higher and the uptrend line it has established, along with the rising 50-day moving average.

A large shooting star candle formed in Wednesday's session which followed four consecutive lower closes and penetrated the support line. The shooting star is a high wick or upper shadow candle with a close near the lower end of its opening and closing range real body, and it often signals the end of a bullish trend.

Moving average convergence/divergence has been moving lower in bearish divergence to the rising stock price, and the relative strength index is exiting an overbought condition and has crossed below its 21-period average. The last volume bar indicates positive volume, but the bars are colored either positive or negative based simply on the day's close relative to the previous day's close. If the current close is higher than the previous day's close, volume that day is considered to be positive volume, and the reverse is true for negative volume. The accumulation/distribution line and Chaikin money flow use the close relative to the overall range of that day's candle, and if it is in the upper range then volume is considered positive and if it is in lower candle range it is considered negative volume.

In the case of a shooting star candle, even if the close was higher than the previous day's close, it is in its lower daily range and the volume that day is represented as negative volume. The 50-day moving average has diverted by more than 5% from the 200-day average, the highest it has been since the October 2015 high, which was followed by a nearly 25% decline in the stock price over the next four months.

Disney is a short candidate at its current level, using a strict trailing percentage stop. Short trades are inherently speculative and require a disciplined trading plan.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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