Hexaware: Bollinger Band squeeze pick

Hexaware Technologies was picked 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.

Considering the daily time frame, the stock witnessed lower tops and lower bottoms in the last six months from the 52-week high to 52-week low. The correction was arrested near 200-week EMA where it had formed a Bullish engulfing candle. Thereafter, the stock has spent almost seven weeks in contracting consolidation. However, the volumes are very low and oscillators are lying below 50 and are tilted southwards. The Average Directional Index (ADX) indicator on daily time frame quoted around 9.55 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 a major advance or decline. For the short-term, Rs. 340 level will be a crucial resistance for the stock. A follow-through move above this level would lead to an extension of the pull-back toward Rs. 355, followed by Rs. 380. While on the downside, the level Rs. 290 will be the short-term support, failure to hold this support would lead to further correction up to the level of Rs. 260.