Computer Age Management Services features as Bollinger Band Squeeze Pick

The stock of Computer Age Management Services 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.  

From the low of Rs 1,260, the stock has maintained its rhythm of higher highs & higher lows. The stock has witnessed almost 50 per cent upward momentum from the low of Rs 1,260. However, the stock has formed a bearish belt hold candlestick pattern as of December 30, 2020, and thereafter, slid into a period of consolidation along with low volume.   

Since the last 19 trading sessions, the stock is trading in the range of Rs 1,865-Rs 1,755. Due to this sideways price action, Bollinger Bands, which was developed on the basis of the last 20 days’ volatility, have contracted on the daily chart. This is an early sign of a bigger move.  

Currently, the short-term trend of the stock is bullish as it is trading above its 20-day EMA as well as the 50-day EMA level. The leading indicator i.e. the 14-period daily RSI is quoting above the 60 mark. Further, the daily ADX is currently quoting at 42.77 and it is in a falling mode, which indicates an absence of strength.   

Talking purely about the trading levels, the zone of Rs 1,330-Rs 1,320 level is a crucial support area while the level of Rs 1,430-Rs 1,460 is a resistance zone. A sustainable move on either side would lead to a trending move.  

Let’s focus on the crucial levels to watch out for in the next couple of trading sessions. On the upside, the zone of Rs 1,865-Rs 1,890 will be a major hurdle for the stock. While, on the downside, the zone of Rs 1,770-Rs 1,740 will be crucial support for the stock as it is a confluence of 38.2 per cent retracement level of its prior upward move (Rs 1,495.05-Rs 1,890) and 20-day EMA level.