Updated June 12, 2019
Lets zoom out first. Looks like MRK completed a Cycle (C/1A; or whatever large degree) wave in 2000, then the next same degree (very) large wave in 2009 (C2/b) and is now back to on the impulse pattern again (yellow 1,2,3,4,5). With this very big picture in mind, we can now move to the price action since the 2009 low and even closer. Cont’d below.
Zooming in, I can clearly count four (yellow, major) waves up off the 2009 low, and wave-5 should now be underway. It is subdividing into the five (red, intermediate) waves, with wave-iii almost complete. Ideally it should tag the 161.80% extension at around $85.70 +/- 30c and then wave-iv of 5 should set in, bring price back to the 100% extension at around $72+/-$2, from where wave-v of 5 of (blue) Primary I then rallies ideally to $89-$93. Once that target is reached I expect Primary II to fall back to the $40-$45 level: a 50% hair cut! This is around the 62-76% retrace of Primary I and typical for a 2nd wave (Primary II), and this is also very strong horizontal support. Bottom line: short term there’s very limited upside (about $2) with ~15% downside risk, to be followed by ~25% upside and then 50% downside risk once upside target is reached. Trade it accordingly.