Technical Bits: Titan features as Bollinger Band squeeze pick

Titan Company 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 formed reversal shooting star candle as on July 1, 2019 and thereafter marked the sequence of lower tops and lower bottoms. Considering the weekly time frame, for the last five weeks, the stock is trading in a contracting consolidation. However, as of now, the price action has narrowed substantially and the stock is likely to give consolidation breakout in the coming days.

The short and long-term trend is bearish, as the stock is trading below its 20-day EMA, 50-day EMA and 100-day EMA. The 14-period daily RSI is currently quoting at 44.17, and it is trading above its 9-day average. The fast stochastic is also trading above its slow stochastic line. The daily MACD stays bullish as it is trading above its zero line. Moreover, the positive divergence is clearly visible between daily RSI, daily stochastic and stock price movement, which suggests limited downside.

Going ahead, it’s important for the stock to sustain and close above the resistance zone of Rs. 1,090-1,095 level. A sustainable move above the level of Rs. 1,095 is likely to open up gates for further rally towards the levels of Rs. 1,130, followed by Rs. 1,150. While on the downside, Rs. 1,060- 1,050 is likely to act as immediate support, while major support is placed in the zone of Rs. 1,010-995 level.