Merck & Co., Inc. (NYSE: MRK) seems to be poised for a price surge as per its latest charts. The company operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. It offers human health pharmaceutical products under the Keytruda, Bridion, Adempas, Lagevrio, Belsomra, Simponi, and Januvia brands.
Bullish Indications
#1 Ascending Triangle Pattern: The daily chart shows that the stock is currently forming an Ascending Triangle pattern. An Ascending Triangle pattern is a bullish pattern. This is marked on the daily chart in purple color lines. A breakout from this pattern typically indicates bullishness. The base of the triangle generally acts as a good support level after the breakout.
MRK – Daily Chart
#2 Price above MAs: The price is currently above the short-term moving average of 50-day SMA as well as the longer-term moving average of 200-day SMA, indicating that the bulls are still in control. This is a positive indication.
#3 Positive OBV: The daily chart shows that the OBV indicator is currently rising. OBV rises when volume on up days outpaces volume on down days. A rising OBV typically reflects positive volume pressure that can lead to higher prices.
#4 Bullish RSI: In the daily chart, the RSI is currently above 50 and moving higher. This is a possible bullish sign.
#5 Above Support Area: As you can see from the weekly chart, the stock has currently moved up from a resistance-turned-support level. This level is marked as a pink color dotted line. This looks like a good area for the stock to move higher. The stock is also trading above its 50-week and 200-week SMA, indicating that the bulls are still in control.
MRK – Weekly Chart
#6 Bullish ADX: In the weekly chart, the ADX indicator shows that the +DI line is currently above the –DI line and the ADX line has started to move up from below the –DI and +DI lines. This indicates possible bullishness.
#7 %K above %D: The %K (blue) line of stochastic has currently crossed above the %D (Orange) line in the weekly chart. This is a possible bullish indication.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, you can purchase shares of MRK above the price of around $132.20.
TP: Our target prices are $139.00 and $145.00 in the next 3-6 months.
SL: To limit risk, place stop-loss below $128.00. Note that the stop-loss is on a closing basis.
Our target potential upside is 5% to 10% in the next 3 to 6 months.
For a risk of $4.20, our target rewards are $6.80 and $12.80. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers nearly 2x to 3x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down from the ascending triangle pattern with a high volume. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.
Happy Trading!
Tara
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