MercadoLibre Drops 3.03% As Bearish Technicals Converge At Key 2350 Support

Mercadolibre (MELI) declined 3.03% in the most recent session, closing at 2402.10 after trading between 2358.32 and 2448.29 on substantial volume. This movement forms part of a broader technical context examined below.
Candlestick Theory
Recent price action shows a bearish engulfing pattern formed on July 10, as the session's red candle completely consumed the previous day's small green body. Key resistance is visible at 2500–2515, where multiple July peaks cluster, while support emerges near 2350–2360, aligning with June's consolidation zone and the 61.8% Fibonacci level. The failed breakout attempt above 2500 on July 1–3 established this resistance, confirmed by subsequent rejections.
Moving Average Theory
The 50-day moving average (currently near 2450) has crossed below both the 100-day (2520) and 200-day (2550), confirming a bearish intermediate trend. Price is trading below all three averages, with the 200-day acting as formidable resistance. The descending alignment of averages signals sustained downward momentum, though the 50-day’s proximity may offer short-term dynamic support if tested.
MACD & KDJ Indicators
MACD shows a bearish crossover in negative territory, with the signal line diverging further below the histogram – indicating accelerating downside momentum. KDJ corroborates this with the %K line (currently 25) plunging below %D into oversold territory. While both oscillators suggest continued bearish pressure, KDJ’s oversold reading flags potential for a minor relief bounce, though not yet confirmed by MACD reversal signals.
Bollinger Bands
Volatility expansion is evident as bands widened sharply during July’s breakdown below 2500. Price is hugging the lower band (2350–2360), a sign of persistent selling pressure. Band contraction preceded July’s directional move, and current width remains elevated, suggesting continued volatility. A close above the lower band would be the first sign of seller exhaustion.
Volume-Price Relationship
Down days since early July have featured higher volume than up days, confirming distribution. Notably, the July 1 breakdown saw volume spike to 573k shares during the 4.29% drop, while July 10’s 3.03% decline occurred on 472k shares – still above the 30-day average. This volume skew validates bearish momentum. Any recovery attempt would require matching volume conviction.
Relative Strength Index (RSI)
RSI (32.1) sits near oversold territory, last testing these levels in mid-June before a temporary rebound. Though the current reading may precede a technical bounce, caution is warranted as RSI can remain oversold during strong downtrends. Divergence would only materialize with a price reversal alongside rising RSI – currently unobserved. The indicator signals oversold risk but not necessarily immediate reversal.
Fibonacci Retracement
Applying Fibonacci to the 2024–2025 rally (low: ~1850 in November 2024; high: ~2645 in July 2025) reveals critical levels. The 61.8% retracement at 2360 aligned with June’s support base and is now being retested. Should this fail, the 78.6% level (2260) becomes the next downside target. The 50% retracement (2250) and 38.2% (2435) levels provided resistance during late June’s abortive recovery, confirming their technical relevance.
Confluence and Divergence
Confluence appears at the 2350–2360 support zone, where the 61.8% Fibonacci level, Bollinger Band lower boundary, and mid-June swing lows converge – making this a critical area for buyer defense. Divergence emerges in oversold readings (RSI and KDJ) contrasting with MACD’s accelerating bearish momentum. Volume patterns align with directional bearishness, though oversold oscillators suggest weakening downside momentum. Probabilistically, breach of 2350 may trigger accelerated selling toward 2260, while holding this support could prompt a tactical rebound to 2450–2500 resistance.