Merck Gains 3.59% on Four-Day Rally as Technical Indicators Signal Uptrend Continuation

Merck (MRK) Technical Analysis
Merck (MRK) has surged 3.59% in the most recent session, marking a four-day winning streak with a cumulative gain of 6.56%. This upward momentum suggests a potential breakout from consolidation or a continuation of an established uptrend, warranting a detailed technical evaluation.
Candlestick Theory
The recent price action exhibits a bullish engulfing pattern over four sessions, with the latest close at $104.72 surpassing prior resistance levels. Key support appears at $98.27 (December 16 low) and $96.05 (December 9 low), while resistance is clustered near $104.95 (December 22 high) and $105.84 (November 25 high). A break above $104.95 could trigger a retest of the November 25 peak, but a failure to hold $98.27 may signal a deeper pullback.
Moving Average Theory
The 50-day (approx. $97.50), 100-day ($95.20), and 200-day ($93.00) moving averages confirm a multi-timeframe bullish bias, with the price comfortably above all three. The 50-day crossing above the 200-day in recent months (a "Golden Cross") further reinforces the uptrend. However, the 100-day lagging slightly behind the 50-day suggests short-term volatility could emerge if the 200-day ($93.00) is approached.
MACD & KDJ Indicators
The MACD histogram has expanded positively, with the line above the signal line, indicating strengthening bullish momentum. The KDJ (Stochastic RSI) shows %K at 88 and %D at 82, nearing overbought territory. While this aligns with the recent rally, a divergence—where %K fails to rise with higher prices—could foreshadow a near-term correction.
Bollinger Bands
Volatility has expanded, with the price near the upper Bollinger Band (current upper band ~$107). This suggests heightened buying pressure but also overbought conditions. A contraction in band width would signal reduced volatility, potentially preceding a breakout or breakdown.
Volume-Price Relationship
Trading volume has surged on recent upmoves (e.g., 16.9M shares on December 22 and 44.98M on December 19), validating the trend’s strength. However, volume has not yet shown a definitive peak, suggesting sustainability may persist. A sharp decline in volume during further advances could indicate waning conviction.
Relative Strength Index (RSI)
The 14-period RSI stands at ~76, nearing overbought (70+). While this is common during strong trends, a close below 70 would reduce overbought pressure. A bearish divergence (lower highs in RSI despite higher price) would heighten caution, though it remains absent for now.
Fibonacci Retracement
Drawing retracement levels from the December 16 low ($98.27) to the December 22 high ($104.95) identifies key levels: 38.2% at $101.50, 50% at $101.61, and 61.8% at $101.72. A pullback to the 50% level could trigger buying interest, but a break below $98.27 may target the next Fibonacci support at $96.05.

Confluence and Divergences
Strong confluence exists at $104.95, where the December 22 high, upper Bollinger Band, and Fibonacci 78.6% retracement converge. Conversely, the $98.27 support level aligns with both a prior low and the 200-day MA. A divergence to watch is the KDJ’s potential overbought stall, which could precede a countertrend move.
Probabilistic Outlook
The immediate bias remains bullish, with a 60–70% probability of testing $104.95–$107. However, a pullback to $98.27–$96.05 is likely if the RSI or KDJ signals exhaustion. Traders should monitor volume during these moves to assess sustainability.
Conclusion
Merck’s technical profile suggests a continuation of the uptrend in the short term, supported by bullish momentum and multi-timeframe alignment. Caution is warranted near overbought levels, and Fibonacci retracements offer strategic entry/exit points. Divergences in the KDJ or RSI could alter this outlook, but for now, the trend remains intact.