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MercadoLibre Bearish Engulfing Could Mean End of Uptrend

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MercadoLibre, Inc. (MELI) shares fell 4% even though company reported better-than-expected first quarter financial results. After transferring sharply higher during pre-market hours, the stock droped to form a bearish engulfing for the reason that day unfolded. The shift suggests that the stock could very well see a correction after more than duplicity so far this year.

Second quarter revenue rose 61.6% to $787.37 million, beating consensus quotations by $129.16 thousand, while GAAP per discuss earnings came in at $1.11, beating consensus quotations by $1.11. Uncouth merchandise volume soared to be able to $5.04 billion, that was significantly higher than the $3.96 billion that experts were expecting to see.

The company reported a new 42.5% increase in special active users, saying that often the pandemic generated significant within consumer behavior, which converted into a new milestone inside penetration of e-commerce and even online payments across Asian America.

At the end of July, Credit Suisse new MercadoLibre stock to Do better than and raised its cost target from $770 to be able to $1,225 ahead of the second quarter financial success. Analyst Stephen Ju assumed that nearly all of send out operating regions were viewing triple-digit year-over-year gross products value growth rates because of the COVID-19 pandemic.

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From a technical viewpoint, the stock experienced a new bearish engulfing following it is move lower during Monday’s session. The relative power index (RSI) moderated to be able to 60.78, and the transferring average convergence divergence (MACD) lost some of it is bullish momentum. These symptoms suggest that the stock could very well continue to see a pullback just before moving higher.

The stock pulled time for the 23.6% Fibonacci retracement during Monday’s procedure before recovering some floor. Traders should watch for all these levels to hold over the arriving sessions, and if not, a potential move to the 38.2% Fibonacci level, where there is significant volume traded. In the event the stock moves higher, it could actually retest prior highs.

The author retains no position in the stock(s) mentioned except through passively managed index funds.

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