Crompton features as Bollinger Band squeeze pick

Crompton Greaves Consumer Electricals Limited was picked 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 volatile contraction or narrowing of the bands can foreshadow a significant advance or decline.

The stock formed a reversal Piercing line candle as on weekend of February 22, 2019 and thereafter the stock gave a gradual rise up to its multiple resistance zone of Rs. 253-251 level. Considering the weekly time frame, from the last seven weeks, the stock is trading in a contracting consolidation. However, as of now, the price action has narrowed substantially and the stock is likely to give consolidation breakout in the coming days.

The short and long-term trend is bullish, as the stock is trading above its 20-day EMA, 50-day EMA,100-day EMA and 200-day EMA. Interestingly, the 14-period daily RSI has broken out of symmetrical triangle pattern, which is a very bullish sign. The daily stochastic oscillator is also suggesting some bullish strength as %K is above the %D.

Going ahead, the stock has immediate support in the zone of Rs. 229-227 as the 100-day EMA and 200-day EMA is placed in that region, while the major support is placed in the zone of Rs. 215-210 level. On the higher side, any sustainable move above the level of Rs. 233 is likely to open up gates for further rally towards the levels of Rs. 245, followed by Rs. 255.