Adani Power features as Bollinger Band Squeeze pick

Adani Power 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 Doji candlestick pattern as on March 19, 2020, and thereafter, witnessed a pullback rally. Considering the weekly timeframe, the stock is trading in contracting consolidation for the last four 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.

The major trend of the stock is bearish as it is trading below its long and short-term moving averages, that is, 20-day, 50-day, 100-day, and 200-day EMAs. The leading indicator, RSI, hovers in the neutral region on both the weekly and daily timeframes, without any bias. The ADX is also below 25-mark on both the weekly and the daily timeframe. 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 36.15-Rs 36.50 level is a crucial resistance level and the level of Rs 34.40-Rs 34 is the short-term support zone. A sustainable move on either side would lead to a trending move.