Merck Shares Fall 0.44% in Latest Session, Extending 1.48% Three-Day Decline Amid Bearish Technical Indicators

Merck (MRK) fell 0.44% in the most recent session, extending its decline to 1.48% over three consecutive days. The price action reflects a bearish bias, with key support levels forming around $88.55 and resistance near $90.75 based on recent intraday extremes.

Candlestick Theory

Recent candles exhibit a series of lower highs and lower lows, signaling a descending channel pattern. The 2025-10-01 session’s bullish reversal (7.39% gain) failed to establish a sustainable bottom, with subsequent bearish engulfing patterns confirming renewed selling pressure. Key support levels at $88.55 (psychological floor) and $85.19 (prior low) may act as potential buying opportunities if the trend reverses.

Moving Average Theory

The 50-day MA (~$87.50) remains below the 200-day MA (~$89.50), confirming a bearish "death cross" configuration. The 100-day MA (~$88.20) aligns with the 50-day MA to reinforce the downtrend. A crossover above the 200-day MA would be required to invalidate the bearish bias, though this appears unlikely in the near term given current momentum.

MACD & KDJ Indicators

The MACD histogram has contracted to neutral territory, but the signal line (9-day EMA) remains below the MACD line, suggesting lingering bearish momentum. KDJ indicators show oversold conditions (K=25, D=30, J=-5), but divergence between the stochastic oscillator and price action (declining prices with rising KDJ) hints at potential exhaustion in the sell-off.

Bollinger Bands

Volatility has compressed, with the 20-period Bollinger Bands narrowing to a width of ~$1.76. Prices hover near the lower band ($88.55), historically a zone for mean reversion. A break above the middle band ($89.30) could trigger a temporary bounce, but the upper band ($90.05) remains a critical resistance level.

Volume-Price Relationship

Trading volume spiked on the 2025-10-01 session (33.46M shares) during the 7.39% rebound, but subsequent sessions show declining volume despite continued price declines. This divergence weakens the reliability of the bearish trend, suggesting potential exhaustion.

Relative Strength Index (RSI)

The 14-period RSI stands at ~28, indicating oversold territory. However, RSI divergences (lower lows in price vs. higher lows in RSI) suggest waning bearish conviction. A close above 35 would signal short-term stabilization, though a sustained move above 50 is required to confirm a reversal.

Fibonacci Retracement

Key Fibonacci levels derived from the 2025-05-14 ($78.36) to 2025-08-28 ($85.59) rally include 61.8% at $81.90 and 78.6% at $83.50. These levels coincide with recent support zones and may act as price targets for short-term bounces.

Backtest Hypothesis

A backtest of the MACD Death Cross strategy (buy on death cross, sell on signal line crossover) from 2022 to 2025 yielded a 11.70% return, underperforming the benchmark’s 49.07% gain. The strategy’s Sharpe Ratio of 0.15 and 20.27% volatility highlight its inefficiency in capturing market upswings. Contextual factors, including Merck’s recent acquisitions and pharma sector dynamics, further complicate the strategy’s applicability.