IDBI, Bollinger Band Squeeze pick
Vinayak GanguleCategories: Markets, Trending
IDBI bounced almost 30 per cent from its previous support zone and then it has been trading in a narrow contracting trading range since early October. This stock recently occurred in our Bollinger Band Squeeze scanner which suggests that consolidation breakout is near.
IDBI bounced almost 30 per cent from its previous support zone and then it has been trading in a narrow contracting trading range since early October. This stock recently occurred in our Bollinger Band Squeeze scanner which suggests that consolidation breakout is near.
From the last 8 weeks, the stock is trading with relatively low volume. 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 14-period day RSI of the stock is quoting around 47.65 and it has already given a negative crossover. The MACD histogram is also below the zero line. All the price damages happen when these indicators are below the zero line.
A consolidation breakout or breakdown below some important support/resistance level with supportive volumes will lead to the major advance or decline. The stock has two major hurdles to cross; one is 200-day exponential moving average and the second is its previous strong resistance zone at Rs 62- Rs 65. For the short-term, Rs. 56 will act as a minor support.