February 3 Chart of the Day - Merck

Precision oriented price action technical analysis by far provides the best edges and most setups for traders and investors across the markets so that's what we use for the basis of our reviews

Pharmaceutical giant Merck (MRK) reports earnings before market open on Tuesday February 4 and is expected to post earnings of $1.69 per share for the current quarter, representing a year-over-year change of blah blah blah. 

Over the last 30 days analysts have also said yada, yada, yada...

What we’re most eager to analyze and share with you is their chart through the lens of price action technical analysis.

We have featured over 400+ Charts of the Day since May 2023 and teach Price Action Trading for FREE to traders who join our Highly Rated Trade Room.

Monthly Chart 

On the monthly chart we can see that price set its $134.63 all time highs (ATH) last summer before falling back towards previous price structure..

With little to no previous price history at ATHs price can go through what we like to call a "discovery phase" to create new structure. 

In this scenario, price sped through the discovery phase and quickly faded back down towards previous and familiar price structure and seemingly is continuing to fall towards a change control zone roughly between $71 - $77.

Change control zones are one of the five price action tools we teach when charting anything.  By definition, they are an area that represents where neither the bulls nor bears are in charge.  Price can slash though the zone with seemingly reckless abandon, price can respect the top or bottom from outside it or within it.  Or, price can trade aimlessly sideways within it.  When price breaks away from the zone it can often get drawn back to it like a magnet. And in this case we see all of the above are true.

Weekly Chart

On the weekly chart we can see with more clarity where price set its ATH before quickly dropping back down the past several months.

Why then when a company makes ATHs can price quickly drop back down?

For a variety of reasons including maybe this was a case of traders and investors taking some profits off the table. 

While price may be getting attracted towards its change control zone there are a few potential support areas where the bulls could step in the $90 area.

Regardless, it's clear to see that for more than two decades price has been making a series of higher highs and higher lows /aka/ an uptrend.

And surely you know the old saying: the trend is your friend!

Until it isn't.

It goes without saying though, the only guarantee in the markets is that price cycles.  It cycles up and it cycles down across all time frames and all charts and rarely, if ever, moves in a straight line.

Only time will tell for sure what price will do next...

We've layered in traditional Fibonacci levels as well as support/resistance and trend to help identify potential price levels of interest and/or future price targets.

Armed with precision oriented charts like these both traders and investors can formulate their respective plans. 

So what's next? 

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