Having suffered a sharp fall the stock is now coming back to the upward trend.

Merck’s strong financial confirms this well-oriented path. Its sales are expected to increase by 3%, the net income more than double for an anticipated lower debts level. In addition, analyst’s revisions on EPS are stimulating for 2013 and 2014.

After having unexpectedly slid by 12% due to the departure of its CFO on January 27, the stock is currently on a recovery process and tries to fill this breakaway gap. Even a the bullish movement has been present since the last 6 trading sessions, the break of the pivot point at EUR 122.2 (weekly data) could be an important trigger to confirm the prolongation of this direction. It will correspond to the breakaway gap.

Considering fundamental and technical analysis, a long position could be taken if the scenario previously exposed takes place. Then, the entry point is EUR 122.3 for a target price of EUR 135.5. A stop-loss order could be placed near the entry point when the trade is opened (below EUR 120).