Discovery Communications Short term Bullish Reversal

By Traders Huddle | August 03, 2012 AAA

New York, August 3rd (TradersHuddle.com) - Shares of Discovery Communications, Inc. (NASDAQ:DISCA) ended the trading

session higher by $0.83 or 1.68% from its previous close. Discovery's price action formed what is considered to be a bullish engulfing candle that could very well signal a continuation of trend or reversal of the ongoing weakness.

Discovery Communications, Inc. (NASDAQ:DISCA) operates as a media and entertainment company worldwide. The Company operates a wide range of educational television channels as well as offers consumer and educational products and services, and a diversified portfolio of digital media services. The company operates cable and satellite television networks in the United States, including Discovery Channel, TLC, Animal Planet, Discovery Health, Discovery Kids, Science Channel, Planet Green, Investigation Discovery, Military Channel, FitTV, and HD Theater.

Discovery's recent stock range was formed by a trough where calculated support was defined at $48.88 and by a peak that established the resistance level at $52.18. This range could be used by traders managing their positions.

Traders wanting to establish a position in Discovery Communications or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk, as it shows where the bears were able to push the stock down, before the bulls step in with a bid.

The bullish engulfing pattern is a leading indicator that provides an alert to the bulls that the trend will continue or that there is an immediate reversal to the short-term weakness seen on the stock. Below an Engulfing Bullish Candle Illustration:

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