Chambal Fertilisers & Chemicals feature as Bollinger Band Squeeze pick

The stock of Chambal Fertilisers & Chemicals 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.

After registering the low of Rs 93.80 on March 23, 2020, the stock has witnessed a pullback rally. The pullback rally is halted between 50 per cent and 61.8 per cent Fibonacci retracement level of its prior downward move (Rs 185-Rs 93.80) and coincides with the long-term moving average, i.e. 200-day EMA. Considering the weekly timeframe, the stock is trading in a contracting 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.

The long-term trend is bearish as it is trading below its 100-day EMA and 200-day EMA. The leading indicator RSI on the daily timeframe hovers in the neutral region without any bias. The daily ADX is below 25 mark and this clearly indicates that the stock lacks a clear trend. Other indicators are also mirroring the same image.

Talking about the trading levels, the zone of Rs 127-Rs 124 level is a crucial support area and the level of Rs 144-Rs 146 is the resistance zone. A sustainable move on either side would lead to a trending move.