MRK plunges, losing $2.58 (-2.91%) within a single day on high volume
Merck & Company Inc. (MRK) Technical Analysis Report for Jan 24, 2020 | by Techniquant Editorial Team
Moving lower for the 6th day in a row, MRK ended the week -5.49% lower at 85.98 after tanking $2.58 (-2.91%) today on high volume, notably underperforming the Dow Indu. (-0.58%). This is the biggest single-day loss in over three months. Today's close at 85.98 marks the lowest recorded closing price since November 25, 2019. The bears were in full control today, moving the market lower throughout the whole session. Closing below Thursday's low at 88.26, the share confirmed its breakout through the prior session low after trading up to $2.68 below it intraday.
Daily Candlestick Chart (MRK as at Jan 24, 2020):
Friday's trading range has been $3.24 (3.66%), that's far above the last trading month's daily average range of $1.17. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently higher than usual for MRK.
One bearish candlestick pattern matches today's price action, the Black Candle.
After trading down to 85.58 earlier during the day, the stock bounced off the key technical support level at 85.60 (S1). The failure to close below the support might increase that levels significance as support going forward. The market closed below the 100-day moving average at 86.26 for the first time since November 11, 2019.
Crossing below the lower Bollinger Band for the first time since October 22, 2019, prices have shown unusually strong downward momentum in the short-term. This could either indicate a potential selling climax after which prices might head back up towards the mean of the Bollinger Bands at 90.19 or signal the beginning of a strong momentum breakout leading to even lower prices. The last time prices broke out below the lower Bollinger Band on October 22, 2019, MRK actually gained 1.93% on the following trading day.
Merck & shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Among the 13 market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "6 Consecutive Lower Closes" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Merck &. Out of 13 times, MRK closed higher 61.54% 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 five trading days, showing a win rate of 61.54% with an average market move of 0.50%.