Expected to report an 8.6% increase in revenue from a year ago

Taking a look at DFS ahead of its earnings tomorrow. In yesterday’s session, the stock’s shares closed the session at $121.26 a share. Earlier in the month, the firm announced that it will deploy Google Cloud’s generative AI to transform customer service, demonstrating new ventures in order to benefit from the current AI boom. According to LSEG data, the company is expected to report an 8.6% increase in revenue from a year ago. The expected EPS is $2.95 on revenue of $4.07bn. From a technical perspective, we can see that the stock experienced a breakout to the upside back in February, but soon found resistance at $131.64. The concern here now is whether this was a false breakout or not and whether the earnings will provide the necessary support for this stock to uphold its share price in the near future. Occasionally, when a break towards the upside occurs, markets can then pull back to re-test the newly formed support level, which tends to be the breakout resistance zone. We can see on the chart there now exists a ‘cross’ area that has been created through the previous resistance trendline and the new supportive trendline. This area will most likely be key for any price consolidation before a move in either direction. The earnings may be the catalyst here for the near future. The support reads $116.41, a break below this support may see the market attempt to close the gap below (falling as low as $110). If the gap is closed then selling pressure may increase. On the other hand, any consolidation in and around the cross area could encourage the buyers for another leg higher. A break above the resistance of $131.64 would shift the focus toward the all-time high of $135.67. The technical indicators have faltered a touch due to recent profit-taking. The MACD is now on a decline but still in theory positive, and is the RSI as it reads 59.