Merck (MRK) - Get Report is testing a solid support zone this week and so far there has been little interest. At Thursday's low, the stock had extended its March pullback to 5.25% and had worked off its overbought reading. This healthy pullback could soon develop into a deep selloff if the $63.00 area is taken out.

Back on Feb. 2, MRK surged more than 3.35% after reporting its fourth-quarter results.  This powerful move began with an upside gap and by the end of the session, the stock had cleared heavy resistance near the December and January highs. MRK went on to surpass its 2016 peak and by March 1, the stock had stretched its rally off the January low to an impressive 13.5% gain. Since the start of this month, MRK has been in pullback mode, but this healthy action is on the verge of downside acceleration.

For patient MRK investors, a convincing break below the $63.00 area will lead to much lower risk entry opportunities. This area marks a key support zone near the December and January highs. The lack of buying interest here is telling and indicates a deeper dip may be needed before the bulls are willing to put money to work. As this plays out, a key level to monitor is MRK's 200-day moving average. This area has held important lows since May of last year. Until the 200 gives way, it should continue to be viewed as major support. A return to this level, just above $61.60, will provide a much lower-risk entry opportunity for patient bulls.

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Long MRK