SRTRANSFIN features as Bollinger Band Squeeze pick

Shriram Transport Finance co. Ltd. has been picked up 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.

After registering all time high, the stock has entered into the corrective phase. The correction is halted near 61.8 per cent of its prior upward move (464.10-1,668.75), where it had formed a Reversal Three White Soldiers pattern on the weekend of September 20, 2019. Thereafter, it is trading in range of Rs. 1,999.65- Rs. 1,009.10.  However, as of now, the price action has narrowed substantially and the stock is likely to give a breakout in the coming sessions.

Majorly, the stock is displaying a bullish trend as it is trading above its medium-long term moving averages, that is, 20-day EMA, 50-day EMA, 100-day EMA, and 200-day EMA. The leading indicator RSI hovers in the neutral region without any bias on both, weekly and daily timeframes. The ADX is below the 15 mark. This clearly indicates that markets lack a clear trend. Other indicators are also mirroring the same image.

Talking purely about the trading levels, the zone of Rs. 1,095-1,085 level is a crucial support area and the level of Rs. 1,185-1,200 is a resistance zone. A sustainable move on either side would lead to a trending move.