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Poly Medicure features as Bollinger Band Squeeze pick

Vinayak Gangule
/ Categories: DSIJ Mindshare
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Poly Medicure features as Bollinger Band Squeeze pick

The stock of Poly Medicure Limited was picked by our Bollinger Band squeeze scanner, which suggests that the stock is near a consolidation breakout. Bollinger Band squeeze occurs when 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 of Rs 542.75, the stock has witnessed a minor correction. The correction is halted near the 50-day EMA level. Considering the weekly timeframe, for the last six weeks, the stock is trading in a contracting consolidation, which resulted in the formation of a symmetrical pattern. Further, due to the narrow range, the Bollinger band (average period 20 and standard deviation 2.00) has contracted substantially on the daily chart. This is a clear indication that the stock is likely to witness volatility expansion in the next few trading sessions.

The major trend of the stock is bullish, as it is trading above its weekly pivot and above its long and short-term moving averages, that is, 20-day, 50-day, 100-day, and 200-day. The leading indicator i.e. the RSI hovers on the daily timeframe in the range of 57-46. The daily ADX is currently quoting at 13.56. This 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 480-Rs 475 level is a crucial support area and the level of Rs 505-Rs 509 is the resistance zone. A sustainable move on either side would lead to a trending move.

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