BPCL features as Bollinger Band Squeeze pick

Bharat Petroleum Corporation Limited (BPCL) has been picked up 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 a Bullish Engulfing Candlestick pattern on August 23, 2019, and, thereafter bounced sharply up to the level of Rs. 545. Considering the daily timeframe, the stock is trading in a symmetrical triangle pattern for the last 29 trading sessions. However, the price action has substantially narrowed and the price has reached near the apex point of the triangle at present, indicating that the stock is likely to give a breakout in the coming days.

Predominantly, the stock is displaying a bullish trend as it is trading above its medium-long term moving averages, that is, 50-day EMA, 100-day EMA, and 200-day EMA. The leading indicator, 14-period daily RSI, is currently quoting at 57.75 and it has recently given a positive crossover. Moreover, the daily stochastic oscillator is also suggesting some bullish strength as %K is above the %D.

Talking purely about the trading levels, the zone of Rs. 505-Rs. 500 level is a crucial support area and the level of Rs. 530-Rs. 535 is the resistance zone. A sustainable move on either side would lead to a trending move.