IIFL Finance features as Bollinger Band Squeeze Pick

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

The stock has given a downward sloping trendline breakout as of November 04, 2020 and thereafter, witnessed nearly 55 per cent upside in just 11 trading sessions. However, after registering a high of Rs 128.55, the stock has witnessed a consolidation over the last 7 weeks.   

Due to the narrow range, Bollinger Bands, which was developed on the basis of the last 20-day volatility, have contracted on the daily timeframe. This is an early sign of a bigger move.  

The leading indicator-RSI hovers in the neutral region without any bias on the daily timeframe and the daily ADX is currently quoting at 10.88. This clearly indicates the lack of a clear trend. Other indicators are also mirroring the same image.  

Talking purely about the trading levels, the zone of Rs 102-Rs 100 level is a crucial support area as it is the confluence of 100-day EMA level and the upward sloping trendline support.  

While on the higher side, the downward sloping trendline is likely to act as a major resistance for the stock, which is currently placed in the zone of Rs 118-Rs 120. A sustainable move on either side would lead to a trending move.