COROMANDEL features as Bollinger Band Squeeze pick

Coromandel International 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 lower levels and the Bollinger Band narrows. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

The stock had given a breakout of downward sloping trendline as on weekend of December 06, 2019 and thereafter, bounced sharply up to its all time high level. Considering the weekly time frame, the stock is trading in contracting consolidation since the last six weeks and formed indecisive candles as traders turn indecisive at higher levels. However, as of now, the price action has narrowed substantially on a daily scale and the stock is likely to give a consolidation breakout in the coming days.

All the moving averages are trending upside and they are in a particular sequence. The stock is meeting Daryl Guppy’s multiple moving averages set up rules as it is trading above both the short and long-term moving averages. The price is trading at 33 per cent above the 50-week average and that indicates a technical strength of the stock.

Talking purely about the trading levels, the zone of Rs 579-Rs 576 level is a crucial support area and the level of Rs 638-Rs 642 is the resistance zone. A sustainable move on either side would lead to a trending move.