MRK plummets, losing $3.82 (-4.5%) within a single day on high volume
Merck & Company Inc. (MRK) Technical Analysis Report for Jul 11, 2019 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, MRK finished Thursday at 81.00 tanking $3.82 (-4.5%) on high volume, strongly underperforming the Dow Indu. (0.85%). This is the biggest single-day loss in over 10 years. Today's close at 81.00 marks the lowest recorded closing price since June 3rd.
Daily Candlestick Chart (MRK as at Jul 11, 2019):
Thursday's trading range has been $3.89 (4.66%), that's far above the last trading month's daily average range of $1.48. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for MRK.
Two candlestick patterns are matching today's price action, the Bullish Hikkake Pattern which is known as bullish pattern and one bearish pattern, the Black Candle. The last time a Black Candle showed up on July 5th, MRK lost -1.82% on the following trading day.
After trading as low as 79.78 during the day, the market found support at the 100-day moving average at 80.92. Merck & closed below the 50-day moving average at 81.68 for the first time since May 31st.
Crossing below the lower Bollinger Band for the first time since April 22nd, prices have shown unusually strong downward momentum in the short-term. This might either indicate a potential selling climax after which prices could head back up towards the mean of the Bollinger Bands at 84.37 or signal the beginning of a strong momentum breakout leading to even lower prices.
While the stock is currently in a short-term downtrend, this might just be a correction, as both the medium and long-term trends are still bullish.
Further selling could move prices lower should the market test June's close-by low at 79.52.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Technical Indicators based market condition "Close below the lower Bollinger Band" stand out. Although it is usually interpreted as bearish, it has actually shown to be bullish for Merck &. Out of 141 times, MRK closed higher 56.03% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 63.83% with an average market move of 1.09%.