Merck in a very Tight Range

Published on Thursday, 09 September 2010 04:32 Written by TradersHuddle Staff

New York, September 9th (TradersHuddle.com) - Shares of Merck & Co. Inc. (NYSE:MRK) closed the trading session at $35.81 placing the price action in a very tight range, given that calculated support is set at $34.41 and the calculated resistance based on an algorithm of peaks and troughs is set at $35.84

Merck & Co., Inc. (NYSE:MRK), the global pharmaceutical company that develops, manufactures, and markets a broad range of human and animal health products. Merck's products include Zocor for treatment of elevated cholesterol, Propecia for treatment for male pattern hair loss, Fosamax for preventive treatment of osteoporosis, and Singulair for treatment of asthma. Merck was founded in 1891 and is headquartered in Whitehouse Station, New Jersey.

Merck's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Merck's price action, as any movement outside its predefined range of $34.41 and $35.84 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $34.41 could spark above average selling. A tiered approach can be a good way to approach starting a position in Merck's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.