Adani Power: Bollinger Band Squeeze pick

Adani Power gets picked up by our Bollinger Band Squeeze scanner, suggesting that a consolidation breakout is expected in the near-term. 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 hitting a 52-week low at Rs. 15.20 per share, the stock witnessed higher top higher bottom sequence and made high around 58.35 levels. Thereafter, stock spent almost four weeks in contracting consolidation. 

However, the volumes are too poor to suggest any momentum. The Average Directional Index (ADX) indicator on daily time frame quoted around 7.34 and it is in a rising mode, which suggests the stock is likely to give directional movement in the near-term. 

A consolidation breakout or breakdown below some important support/resistance level with supportive volumes will lead to the major advance or decline. For the short term, a close above Rs 54.25 or close below Rs 47.45 will lead to a major momentum in the stock.