Technical Bits: Intellect Design features as Bollinger Band squeeze pick

Vinayak Gangule
/ Categories: Trending
Technical Bits: Intellect Design features as Bollinger Band squeeze pick

The stock of Intellect Design Arena 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 formed a reversal piercing line candle near the horizontal trendline zone as on the weekend of February 22, 2019 and thereafter the stock has risen up to its multiple resistance zone of Rs. 275-Rs. 278. The stock could not breach the zone and for the last five weeks, it was hovering around the resistance zone. On daily time frame, the price action has narrowed substantially 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 leading indicator 14-period RSI is currently quoting at 62.95 and it is in the super bullish zone. The daily stochastic oscillator is also suggesting some bullish strength as %K is above the %D.

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, the zone of Rs. 275- Rs. 278 level will be the crucial resistance for the stock as the downward sloping trendline is placed in that region. A follow-through move above this level would lead to an extension of the pull-back toward Rs. 295, followed by Rs. 310. While on the downside, the zone of Rs. 263- Rs 261 will act as immediate support as it is the confluence of upward sloping trendline and short-term 20-day EMA, failure to hold this support would lead to further correction up to the level of Rs. 252, followed by Rs. 240.

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