Apollo Tyres Ltd features as Bollinger Band Squeeze pick

The stock of Apollo Tyres Limited was picked by our Bollinger Band squeeze scanner, which suggests that the stock is near a consolidation breakout. Bollinger Band squeeze occurs when volatility falls to low levels and the bands narrow. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

After registering the high of Rs 182.35 on January 27, 2020, the stock has witnessed a correction. The correction is halted at Rs 73.40 level and thereafter, it has witnessed a gradual pullback rally. In this pullback rally, the stock has made two attempts to close above 23.6 per cent retracement level of its recent downward rally (Rs 182.35-Rs 73.40) but failed and witness a correction. Considering the weekly timeframe, the stock is trading in a consolidation since the last three weeks. However, as of now, the price action has narrowed substantially and the stock is likely to give a consolidation breakout in the coming days.

Currently, the stock is trading below its short and long-term moving averages, i.e. 50-day EMA, 100-day EMA and 200-day EMA. The leading indicator, 14-period daily RSI hovers in a neutral region without any bias since the last 28 trading sessions. The daily ADX is below the level of 5. This clearly indicates that the stock lacks a clear trend. Other indicators are also mirroring the same image.

Going ahead, on the higher side, the level of Rs 103.30 is acting as a stiff resistance and on the downside, Rs 81 is acting as a support level. Only a breakout on either side could lead to a directional move.