MER may develop a Rectangle Formation. Trade the range.

MER broke from the 20-day SMA line few days ago but it seems this line will be tested if its going to be a strong support as MER pulls back after reaching 297 yesterday. Today it retraces by 1.36% and showing some bearish bias. We also see an interesting formation being developed here. So far it looks like it is going to trade within the 61.8% and 76.4% Fibonacci Retracement levels. Is MER creating a Rectangle Formation?

“A Rectangle is a continuation pattern that forms as a trading range during a pause in the trend. The pattern is easily identifiable by two comparable highs and two comparable lows. The highs and lows can be connected to form two parallel lines that make up the top and bottom of a rectangle. Rectangles are sometimes referred to as trading ranges, consolidation zones or congestion areas.” -stockcharts.com

Caveat!

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