Infosys features as Bollinger Band Squeeze pick

Infosys 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 volatility falls to low levels and Bollinger Band narrows down. Volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

After registering the all-time high of Rs 847, the stock witnessed a correction. The correction is halted near 200-week EMA level and thereafter, the stock had marked the sequence of gradual higher tops and higher bottoms. Considering the weekly timeframe, the stock is trading in contracting consolidation from the last four weeks and formed four indecisive candles. 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 bullish, as it is trading above its long and short-term moving averages, that is, 20-day, 50-day, 100-day, and 200-day EMAs. The leading indicator RSI on daily timeframe is trading in the range of 61-52 since the last eight trading sessions and the daily ADX is also declining since the last nine trading sessions. This 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 765-Rs 755 level is a crucial support area and the level of Rs 790-Rs 800 is the resistance zone. A sustainable move on either side would lead to a trending move.