Gujarat Gas as the Bollinger Band Squeeze Pick

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

The stock had formed reversal Gravestone Doji candle on August 09, 2019 and thereafter witnessed correction. The correction is arrested near 100-day EMA and thereafter the stock is consolidating in range of Rs. 185-165 since the last seven weeks. However, as of now, the price action has narrowed substantially and the stock is likely to give a breakout in the coming days.

The short and long term trend is bullish, as the stock is trading above its weekly pivot and also above 20-day EMA, 50-day EMA, 100-day EMA and 200-day EMA. The leading indicator, 14-period daily RSI is currently quoting at 54.78 and it has recently given positive crossover. Interestingly, the daily RSI is in a symmetrical triangle formation and any breakout will be a great opportunity to buy this stock.

Going ahead, the stock has immediate support in the zone of Rs. 175-174 as the 20-day EMA and 50-day EMA is placed in that region. While the major support is placed in the zone of Rs 171-169 as it is the confluence of 100-day EMA and the upward sloping trendline support, the major resistance is placed in the zone of Rs. 179-181 level.