From $61.62 in 2008, Merck & Co. Inc. declined to $20.05 in 2009 (A-B), rallied to $41.56 in 2010 (C), then settled in a trading range between $30.50 and $39.50 to produce a bullish technical pattern known as a V-Extended (dashed lines).
Merck had a breakout from this range recently and rallied to a high of $45.17 (D) to signal the start of a new up-leg.
A minor pullback may occur but only a decline below about $39 would be negative. Point & Figure measurements provide targets of $49 and $54.
The large V-Extended formation (dashed lines) supports higher targets.
Monica Rizk is the senior technical analyst for Phases & Cycles Inc. (www.phases-cycles.com). Ron Meisels is a contributor to the www.NA-marketletter.com website and Tweets at @Ronsbriefs. They may hold shares in companies profiled. Please see the site for a glossary.
Chart source: www.decisionplus.com