Discover Financial Services (DFS) has been declining under the weight of increased selling pressure the past five months. Prices are down near an area of prior resistance, which could reverse roles and become an area of support in the days and weeks ahead.
Assuming that DFS finds support above or in the top half of the $58-$54 area, it will likely take a prolonged consolidation phase before a new rally might get under way.
In this daily bar chart of DFS, above, we can see how prices are below the declining 50-day moving average line and the cresting 200-day moving average line. The 50-day line is poised to cross below the 200-day line for a dead-cross signal. The daily On-Balance-Volume (OBV) line peaked in December and has been eroding since. A declining OBV line happens when the volume of shares traded on down days for DFS outnumbers the volume traded on up days. More volume on a down day is a sign that traders want to get out. In the lower panel is the 12-day momentum study, which does not show a bullish divergence to the price action -- momentum and prices are not diverging, unfortunately.
In this weekly bar chart of DFS, above, we can see prices are well below the cresting 40-week moving average line. The weekly OBV line has made a new low, looking back three years. The weekly Moving Average Convergence Divergence (MACD) oscillator is moving below the zero line for an outright sell signal.
Bottom line: The price of DFS is a bit stretched to the downside and potential support begins around $58, but with a weak-looking daily and weekly chart and signs of aggressive selling, we don't want to encourage anyone going long.