Adani Enterprises feature as Bollinger Band Squeeze pick

Adani Enterprises 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 reversal evening star candlestick pattern as on weekend of February 28, 2020 and thereafter, witnessed a correction. The correction was nearly 55 per cent from the top. Considering the weekly time frame, the stock is trading in consolidation for the last five weeks. However, as of now, the price action has narrowed substantially and the stock is likely to give a consolidation breakout in the coming days.

Currently, the stock is trading below its 20-week EMA (165.90), 50-week EMA (170.30), 100-week EMA (163.95) and 200-week EMA (169.10), which indicates a medium and long-term downtrend. Nine trading sessions back, the 200-DMA crossed over 50-DMA and was termed as the 'death crossover', which is a long-term bearish signal. The leading indicator RSI on the daily time frame hovers in the neutral region without any bias and the daily ADX is currently quoting at 12.21. This clearly indicates the lack of a clear trend. Other indicators are also mirroring the same image.

Talking purely about the trading levels, the zone of Rs 130-Rs 127 level is a crucial support area and the level of Rs 145-Rs 147 is the resistance zone. A sustainable move on either side would lead to a trending move.