Axis Bank features as Bollinger Band Squeeze pick

The stock of Axis Bank Limited has been picked up by our Bollinger Band Squeeze scanner, which suggests that the stock is near a consolidation breakout. Bollinger Band Squeeze occurs when the volatility falls to low levels and the band narrows. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

The stock has formed a ‘Homing Pigeon’ candlestick pattern as on May 26, 2020, and thereafter, witnessed a gradual pullback rally up to the level of Rs 484.60. Considering the weekly timeframe, the stock is trading in contracting consolidation for the last eight weeks and formed indecisive candles. However, as of now, the price action has narrowed substantially on a daily scale and the stock is likely to give a consolidation breakout in the coming days.

Currently, the stock is trading below its weekly pivot and long-term moving averages, i.e. 100-day EMA and 200-day EMA. The leading indicator, 14-period daily RSI, hovers in a neutral region since the last 21 trading sessions. The average directional index (ADX), which shows the strength of the trend, is below the mark of 10. Further, since the last 21 trading sessions, the volume is below the 50-day average. This clearly indicates that there is an absence of strength in the stock. Other indicators are also mirroring the same image.

Talking purely about the trading levels, the zone of Rs 430-Rs 425 level is a crucial support area and the level of Rs 452-Rs 456 is the resistance zone. A sustainable move on either side would lead to a trending move.