Bajaj Finserv features as Bollinger Band squeeze pick

Bajaj Finserv 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.

The stock had given downward sloping trendline breakout as on weekend of March 1, 2019 and thereafter marked the sequence of higher tops and higher bottoms. Considering the weekly time frame, the stock is trading in contracting consolidation since the last five weeks and formed three doji like candles as traders turned indecisive at higher levels. However, as of now, the price action has narrowed substantially on a daily 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 long-short term moving averages, i.e. 20-day, 50-day, 100-day and 200-day EMAs. Daily strength indicator RSI continues to remain flat and trading below its 9-day average, indicating the absence of strength. But momentum oscillator stochastic is inclined southward, indicating further downside momentum. The daily MACD stays bearish as it is trading below its zero line since the last eight trading sessions.

In the near-term, the zone of Rs. 8,360- Rs. 8,390 is likely to act as an immediate resistance as the horizontal trendline is placed in that region. While on the downside, the zone of Rs. 8,130-Rs. 8,100 will be the immediate support, failure to hold this support would lead to further correction up to the level of Rs. 7,900, followed by Rs. 7,790.