MercadoLibre Drops 3.85% As Bearish Signals Dominate Near-Term Trading

Candlestick Theory
Mercadolibre (MELI) ended its latest session at $2,482.39, a 3.85% decline, forming a bearish engulfing pattern after testing resistance near $2,595–$2,635 (May 22–June 5). Key support emerges at $2,414 (June 6 low), aligning with the March 2025 swing low. Resistance is established at $2,545–$2,635, a zone where multiple prior rallies stalled. This candlestick structure suggests sellers are dominating near-term price action, with the breakdown below $2,500 indicating bearish momentum.
Moving Average Theory
The 50-day moving average (MA) currently at $2,480 converges with the latest close, while the 100-day and 200-day MAs hover near $2,300 and $2,100, respectively. MELI’s price remains above the 100-day and 200-day MAs, confirming the longer-term uptrend. However, the breach below the 50-day MA and its flattening slope signal short-term weakness. A sustained hold below the 50-day MA may accelerate selling pressure, whereas reclaiming it could stabilize the trend.
MACD & KDJ Indicators
The MACD histogram shows a bearish crossover, with the signal line diverging below the MACD line. This aligns with negative momentum as prices retreat from recent highs. Meanwhile, the KDJ oscillator depicts an oversold signal, with the K-line (17) and D-line (23) both below 30. While this hints at potential exhaustion in selling pressure, the KDJ’s oversold reading lacks confirmation without bullish reversal patterns. Divergence is noted as KDJ signals oversold while MACD reinforces bearish momentum.
Bollinger Bands
Volatility expanded sharply during the June 6 sell-off, with prices piercing the lower Bollinger Band (20-day basis). This deviation typically precedes a mean-reversion bounce, but the band’s expansion suggests ongoing volatility. The 20-day band width increase reflects rising uncertainty, with support now near $2,414 and resistance at the mid-Bollinger line near $2,530. A close back within the bands would signal stabilization.
Volume-Price Relationship
The June 6 decline saw significantly elevated volume (713k shares vs. 238k prior day), confirming bearish conviction. Recent rallies near $2,600 (May 22–30) lacked proportional volume expansion, indicating weak buying interest. Conversely, the high-volume reversal on May 8 (+6.54%) established a structural support level near $2,410–$2,430. Current volume patterns validate the bearish breakout, though capitulatory volume may foreshadow a near-term bounce.
Relative Strength Index (RSI)
The 14-day RSI reads 31, approaching oversold territory (<30) after the sharp decline. While this suggests diminishing downward momentum, RSI has not yet signaled a clear reversal. Historical instances of RSI near 30 (e.g., March 2025) preceded bounces, but oversold conditions can persist in strong downtrends. Caution is warranted until RSI crosses above 40 or exhibits bullish divergence.
Fibonacci Retracement
Applying Fibonacci levels to the rally from the February 2025 low ($1,800) to the May 2025 high ($2,636), the 38.2% retracement at $2,330 held briefly before the recent breakdown. The 50% retracement aligns with $2,218, while the 61.8% level converges with the $2,100–$2,150 volume-based support zone. The breach below the 38.2% level exposes $2,218, though oversold indicators and historical buying near $2,410 may trigger short-term stabilization.
Confluence and Divergence
Confluence of bearish signals is evident: The breakdown below the 50-day MA and $2,500 psychological support aligns with MACD’s bearish crossover and high-volume selling. Oversold KDJ and RSI readings conflict with this momentum, suggesting potential for a technical bounce near $2,410–$2,440. A key divergence exists between declining prices and the rising 100-day/200-day MAs, underscoring the longer-term uptrend’s resilience despite short-term pressure. Probabilistically, sustained trade below $2,480 may extend declines toward $2,350, while reclaiming $2,530 would invalidate immediate downside risks.