MercadoLibre Slides 0.35% as Bearish Technicals Signal Further Downside Risk

Mercadolibre (MELI) concluded its most recent trading session with a marginal decline of 0.35%, closing at $2,179.89. Over the past year, MELI has exhibited significant volatility, experiencing a substantial rally from late 2024 through mid-2025 followed by a pronounced correction, requiring comprehensive technical assessment across multiple indicators.
Candlestick Theory
Recent sessions reveal bearish momentum. A large bearish engulfing candle on October 1st coincided with exceptionally high volume, confirming distribution after peaking near $2,345. The subsequent formation of lower highs (recently rejected near $2,199) and lower lows establishes immediate resistance around $2,250 and critical support near $2,140. Failure to hold $2,140 may trigger further downside targeting the June 2025 consolidation zone near $1,900-$1,950. Key reversal signals are currently absent, suggesting prevailing selling pressure.
Moving Average Theory
The 200-day moving average (~$2,250) rejected recent recovery attempts, reinforcing its role as formidable resistance. A death cross emerged recently as the 50-day MA crossed decisively below the 200-day MA, signaling a potential shift to a sustained bearish phase. Furthermore, current price action resides well below all key SMAs (50-day ~$2,320, 100-day ~$2,370), confirming the medium-term downtrend remains intact. The SMAs now act as dynamic resistance layers.
MACD & KDJ Indicators
The MACD line remains below its signal line and the zero axis, firmly in bearish territory. The histogram shows intensifying negative momentum over the past week. Concurrently, the KDJ indicator is deeply oversold, with the K and D lines hovering near 20. While KDJ readings suggest potential for a technical rebound due to extreme oversold conditions, the strong bearish MACD momentum divergence advises caution – any bounce may prove short-lived without significant volume confirmation. No bullish divergence is yet evident.
Bollinger Bands
Bands are contracting noticeably after a period of expansion during the late September decline, indicating reduced volatility and a potential coiling period before the next directional move. Price persistently trades near or below the lower band, a sign of sustained downward pressure and bearish continuation. A sustained move back inside the bands would be necessary to signal stabilization, while a close above the middle band (~$2,300) would be needed for a more constructive outlook.
Volume-Price Relationship
Volume has persistently expanded during down days (notably October 1st, September 30th, August 6th) while rising days exhibit comparatively muted volume, confirming weak buying interest and active distribution. The recent minor rebound attempts lacked conviction, characterized by below-average volume. This validates the bearish trend's sustainability. High volume breakdowns through support (~$2,172 recently) increase the technical significance of those failures.
Relative Strength Index (RSI)
The current daily RSI stands at approximately 37, moving out of oversold territory (<30) but still below neutral (50). While not excessively oversold currently, the RSI has struggled to surpass the 50 level during recent counter-trend rallies, confirming weak momentum. It is crucial to remember the RSI can remain in bearish territory for extended periods during strong downtrends. A sustained move above RSI 50 would be necessary to indicate improving momentum.
Fibonacci Retracement
Applying Fibonacci levels to the primary downswing from the all-time high near $2,645 (July 1st) to the key low near $1,908 (August 3rd) reveals significant technical levels. The 38.2% retracement (~$2,190) was briefly surpassed but failed to hold. This level now acts as immediate resistance. The more critical 50% retracement resides near $2,276.50, aligning with the 200-day MA and the psychologically significant $2,250 level, creating a major confluence resistance zone. The 61.8% retracement (~$2,362) aligns with the falling 100-day MA and represents a formidable barrier for any sustained bullish reversal. On the downside, the August low of ~$1,908 provides the next major support if $2,140 decisively breaks.
Confluence & Divergence Observations
Significant confluence exists around the $2,225-$2,275 resistance area, bolstered by the 200-day MA, the 50% Fibonacci level, and prior breakdown points. This cluster makes overcoming this zone technically challenging without a fundamental catalyst. The oversold KDJ reading stands in contrast to the MACD's intensifying bearish momentum – a key divergence suggesting bearish momentum could override any immediate oversold bounce attempt. The volume profile consistently confirms bearish strength and casts doubt on recovery sustainability. Overall, the technical structure favors the prevailing bearish trend, though oversold readings and potential support near $2,140 warrant vigilance for short-term stabilization attempts.