Dr. Lal Path features as Bollinger Band squeeze pick

Dr. Lal Path Labs Ltd was picked by our Bollinger Band squeeze scanner on the weekly time frame, which suggests that the stock is close to 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.

The stock had formed a reversal bullish engulfing candle near double bottom zone as on November 22, 2018 and thereafter marked the sequence of gradual higher tops and higher bottoms. Currently, the stock is hovering around downward sloping trendline resistance and formed two indecisive candles on a weekly scale. However, as of now, the price action has narrowed substantially on a weekly scale and the stock is likely to give consolidation breakout in the coming days.

The major trend of the stock is bullish as it is trading above its weekly pivot and above its long-short term moving averages, i.e. 20-day, 50-day, 100-day and 200-day EMAs and these moving averages are exactly in an ascending order, which suggests that the trend is strong. The daily ADX is currently quoting at 18.25. The -DI is below the +DI. This shows the technical strength in the stock. Last week, the volumes recorded were above the 50-week average, which is a sign of accumulation. The leading indicator RSI is in a symmetrical triangle formation and any breakout will be a great opportunity to buy this stock.

In the near-term, the zone of Rs. 1,100- Rs. 1,110 is likely to act as an immediate resistance as the downward sloping trendline is placed in that region. A decisive close above this level would lead to an extension of the pull-back toward Rs. 1,150, followed by Rs. 1,200. While on the downside, the zone of Rs. 980-975 will be the immediate support, failure to hold this support would lead to further correction up to the level of Rs. 940, followed by Rs. 890.