MercadoLibre stock: Weak momentum and resistance cap price drop after new Argentina investment

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MercadoLibre slides 6.81% to $1,645.85

Highlights

MercadoLibre will invest $3.4 billion in Argentina in 2024, prioritizing logistics expansion and Mercado Pago growth.
The company tightened fintech lending policies by adding AI-driven credit risk models and stricter loan limits amid market headwinds.
MELI trades well below major moving averages with strong bearish momentum, likely to test the $1,615–$1,780 range as oversold signals emerge.

Investment ramps up and fintech pivots as competitive pressure persists

MercadoLibre announced plans to invest $3.4 billion in Argentina this year, a 30% increase over the previous year, focusing on expanding logistics infrastructure, opening new distribution centers, and scaling its Mercado Pago fintech business. The company also implemented stricter loan limits and introduced artificial intelligence for enhanced credit risk assessment within its fintech lending operations. These actions were reported amid ongoing competitive and market pressures, though price action has remained under broader selling pressure.

Sustained downside momentum as oversold readings challenge support

Momentum indicators display negative bias, with the D1 MACD and ADX both signaling sell and confirming strong downside momentum. RSI (37.62), CCI (–59.18), and multiple Stoch RSI and BBP readings indicate the market is entering oversold territory, with sellers currently dominating. The Awesome Oscillator is neutral and does not add conviction. MELI gapped down at the open and is now near the low end of today's $1,638.71 – $1,711.50 range, marking a drop of $120.25 (down 6.81%) with high intraday volatility and sustained pressure after the open. Despite some conflicting oversold signals, the intraday momentum aligns with bearish sentiment.

Further downside expected as bears test lower support after failed rebound

The expected trading range for the next 5 sessions is $1,615 to $1,780, reflecting the need to normalize forecasted moves around the current price. The probability of a price increase is very low (less than 20%), making further downside the more likely scenario. Baseline: MELI may consolidate sideways as bears lose momentum near oversold readings. Bullish: recovery is possible only on a break above immediate resistance at $1,906. Bearish: continued pressure may push the price below $1,615, especially if oversold conditions fail to attract buyers.

Anton Kharitonov, expert at Traders Union, sees MELI as technically weak given its position far below all key moving averages and strong selling pressure confirmed by momentum indicators. He notes that the recent $3.4 billion investment plan has so far failed to lift sentiment, while technicals indicate sellers remain in control and oversold signals have not triggered meaningful buying. Consolidation may occur if bears start to exit, but a break below the $1,615 support cannot be ruled out. "Until we see a recovery above $1,906, I remain defensively positioned and do not trust any upside attempts here."

Previously it was reported that MercadoLibre Inc. is trading with persistent downside pressure, remaining well below all key moving averages, with bearish momentum confirmed by negative MACD, weak directional strength, and multiple oscillators indicating oversold conditions. Resistance is established near $1,998, with limited rebound potential as dominant selling pressure suggests MELI will likely remain range-bound between support at $1,630 and resistance at $1,780 over the near term.

Source of Data: MELI Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.