Could See Some Juicy Trades Ahead

Action around key moving averages and long-term support or resistance can be an important determinant of the future of a stock's price, and this usually involves consolidation, range compression and a decline in volume. It's usually resolved, moreover, with a volatile move, confirmed by an increase in volume that returns the stock to trend -- but, of course, this isn't always the case. With that in mind, I'm seeing three stocks that are in the final stages of consolidations at or near a confluence of trendline and moving average support. Subsequent price action here, therefore, could provide for good trading opportunities.

Merck (MRK) -- Weekly Source: StockCharts.com View Chart » View in New Window »

Merck (MRK) is currently testing its 50- and 200-day moving averages and a long-term uptrend line. A small head-and-shoulders continuation pattern is forming on the weekly chart, with the neckline in the $43.50-to-$44 area. The relative-strength indicator is crossing above both its centerline and its 21-period signal average, and stochastics has crossed above its centerline after having completed its own inverse head-and-shoulders pattern. Money flow is confirming the momentum indicators, with the Chaikin oscillator -- a three- and 10-day measure of accumulation/distribution -- crossing above its signal average....212 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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