NIIT Technologies feature as Bollinger Band Squeeze pick

NIIT Technologies Limited has been picked up 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.

After registering an all-time high level, the stock has entered into the corrective phase. The correction is halted near Rs 735.35 level and thereafter, it has witnessed a pullback rally up to 50 per cent retracement level of its prior downward move (Rs 2,059.50-Rs 735.35). Considering the weekly time frame, the stock is trading in a consolidation since the last five 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 50-day EMA (1,316.10), 100-day EMA (1,431.70) and 200-day EMA (1,445.50), which indicates a medium and long-term downtrend. However, the leading indicator RSI on the daily time frame, hovers in the neutral region without any bias. The daily ADX is below 25 and +DI is just above–DI by a narrow margin. This clearly indicates that the stock lacks a clear trend. Other indicators are also mirroring the same image.

Talking purely about the trading levels, the zone of Rs 1,020-Rs 1,000 level is a crucial support area and the level of Rs 1,250-Rs 1,275 is the resistance zone. A sustainable move on either side would lead to a trending move.