As I point out in the chart, MRK is in a very tight consolidation here. With the RSI holding inside of bullish territory after it's recent bounce off the 150EMA it has run into previous resistance. This resistance coincides with a sort of ascending triangle based on the higher-lows it has been making since March '14. This pattern comes to us after a long run up from Nov '13, leading me to have a bias for this play to the upside.
The goal here is to watch it intraday and get long one tick above the most recent bar high ($59.37). Alternatively, we will get short intraday at one tick below the most recent bar low ($58.89) and holding it short expecting a bounce off of the resistance.
The idea is to SAR (Stop & Reverse) the position on a close one tick above/below the same high/low, depending on how we entered.
This means we have $0.77 cents of risk either direction. With a target on the downside around $56.30 and to the upside $64.75 by conservative estimates, that gives us a favorable risk reward. All said and done, the thinking here is that with this tight consolidation at a key level, a big decision will be made here in the coming days, that will make a big play for us. What happens after these candles could be the deciding factor, and we may even see a candle that reinforces one direction over the other to help us in our decision.
The goal here is to watch it intraday and get long one tick above the most recent bar high ($59.37). Alternatively, we will get short intraday at one tick below the most recent bar low ($58.89) and holding it short expecting a bounce off of the resistance.
The idea is to SAR (Stop & Reverse) the position on a close one tick above/below the same high/low, depending on how we entered.
This means we have $0.77 cents of risk either direction. With a target on the downside around $56.30 and to the upside $64.75 by conservative estimates, that gives us a favorable risk reward. All said and done, the thinking here is that with this tight consolidation at a key level, a big decision will be made here in the coming days, that will make a big play for us. What happens after these candles could be the deciding factor, and we may even see a candle that reinforces one direction over the other to help us in our decision.