Medline (MDLN) Slips 3.29% on Bearish Patterns Nears Key Support at $40.62 Amid Downtrend

Medline (MDLN) closed the most recent session at $40.62, reflecting a 3.29% decline. This price action suggests a bearish continuation, particularly given the recent intraday low of $40 and the formation of a potential bearish engulfing pattern over the prior two days. Key support levels appear to be consolidating around $40.62 (previous close) and $39.50 (December 18th low), while resistance is likely to be tested at $42.04 (January 2nd high) and $43.08 (December 31st high). The breakdown below the $41.21 pivot point raises the probability of further downward pressure.
Candlestick Theory
The recent price action exhibits a series of lower highs and lower lows, forming a descending channel that aligns with bearish bias. A notable bearish harami pattern emerged on December 29th, with the $42.00 close confined within the prior session’s range. This pattern, combined with the failure to reclaim key psychological levels above $43, suggests a potential test of the $38.82 (December 19th low) support. The 50% Fibonacci retracement level at $40.00 (from the $45.50 high to $34.89 low) could act as a critical threshold for near-term direction.
Moving Average Theory
Short-term momentum is bearish, with the 50-day moving average likely below the 200-day average (death cross configuration), while the 100-day line may be approaching a confluence with the 200-day line. The current price of $40.62 appears to be below all three averages, reinforcing a downtrend. A retest of the 200-day line (approximately $41.50) could trigger a short-term bounce, but sustained strength above $42.04 would be necessary to invalidate the bearish thesis.
MACD & KDJ Indicators
The MACD histogram has contracted into negative territory, with the MACD line crossing below the signal line—a bearish divergence. The KDJ (stochastic oscillator) shows %K and %D lines in oversold territory (below 20), but the lack of a bullish crossover suggests exhaustion rather than reversal potential. A divergence between price and KDJ could emerge if the stock breaks below $40.00 without a corresponding rally in the indicator, signaling further weakness.
Volatility has expanded sharply, with the 20-day Bollinger Bands stretching to $42.04 (upper) and $39.50 (lower). The current price near the lower band indicates extreme bearish momentum, though a rebound to the mid-band ($40.77) could provide a temporary floor. Band contraction observed on December 26th preceded the recent selloff, suggesting that a period of consolidation may follow a potential bounce.
Volume-Price Relationship
The recent session’s volume of 7.35 million shares is above the 20-day average, validating the bearish move. However, the December 17th session saw an anomalous 78.9 million shares traded amid a $34.89 low, indicating potential distribution or panic selling. A surge in volume during a rebound attempt could confirm a short-covering rally, while declining volume during further declines may signal capitulation.
Relative Strength Index (RSI)
The 14-day RSI is near 28, indicating oversold conditions. However, this reading should be interpreted cautiously, as the RSI has remained in oversold territory for multiple sessions, suggesting a structural breakdown rather than a temporary correction. A move above 40 would be necessary to alleviate bearish pressure, but this is unlikely without a significant reversal pattern.
Fibonacci Retracement
Key Fibonacci levels from the $45.50 high to $34.89 low include 38.2% at $41.05 and 61.8% at $38.20. The current price near $40.62 is testing the 50% retracement level, which often acts as a psychological pivot. A breakdown below $38.82 would target the 61.8% level, while a bounce above $41.05 could reestablish a short-term equilibrium.

Confluence between candlestick breakdowns, oversold RSI, and bearish MACD strengthens the case for further declines to $38.20. Divergences between KDJ and price suggest the selloff may lack conviction, though volume validates the move. A key divergence to monitor is a price rebound to $42.04 without corresponding strength in the RSI or MACD, which would indicate a bear trap. Probability remains skewed to the downside in the near term, with a 60% chance of a test of $38.82 and a 40% chance of a countertrend bounce to $41.05.