Tata Steel features as Bollinger Band Squeeze pick

Tata Steel Limited 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 formed a reversal bearish pin bar candlestick pattern as on the weekend of January 17, 2020 and thereafter, witnessed a correction. The correction was nearly 50 per cent from the top. Considering the weekly timeframe, for the last six weeks, the stock is trading in a consolidation. However, as of now, the price action has narrowed substantially and the stock is likely to give a consolidation breakout in the coming days.

Majorly, the stock is displaying a bearish trend as it is trading below its short and long-term moving averages, that is, 20-week EMA, 50-week EMA, 100-week EMA and 200-Week EMA. The 200-DMA crossed over 50-DMA around 38 trading sessions ago, called the ‘death crossover', which is a long-term bearish signal. The leading indicator, 14-period weekly RSI, is currently quoting at 35.60 and it is in a super bearish zone.

Going ahead, the zone of Rs 259-Rs 250 level is a crucial support area and the level of Rs 288-Rs 291 is the resistance zone. A sustainable move on either side would lead to a trending move.