Market Analysis

Germany’s Merck counterbid for Versum drops prices

German healthcare company Merck KGaA, which manufactures medicines and laboratory supplies, has made a $5.9 billion counterbid for Versum Materials. Merck intends to use the deal to strengthen its electrochemical activities.

Merck’s share price reacted to the news on Wednesday with a significant discount of more than four percent.

From a chart technical point of view, the share broke through its upward trend line with a momentum candle yesterday. The range between €89 and €93.7 is now decisive for further share price development. The area around €89 should provide initial support, but if not, the picture will cloud over. If there is breakthrough downwards through this range, the next support could be in the area of €85. If the stock breaks through there as well, the area around €82 could offer further support.

The MACD indicator turned in on Tuesday and was naturally strengthened by the sharp downward movement.

With the strong downward movement, the 38- and 50-day smoothing lines crossed, which could be an additional sign of short-term price weakness.

If the bulls regain control, and the stock returns to near its trend line and the €93.7 area, then there is potential for further rising prices in the €97.65 area. If the bulls provide sufficient momentum for further price rises, prices in the range of €101 could be possible.


MRK.GE Daily Chart | Source: ActivTrader

MRK.GE Daily Chart | Source: ActivTrader 


Written by Daniel Schuetz, External Analyst


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