Dredging Corp features as Bollinger Band squeeze pick

Dredging Corporation of India 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 volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

The stock formed a reversal Doji candle as on weekend of May 17, 2019 and thereafter the stock gave a gradual rise up to its multiple resistance zone of Rs. 410 - 415 level. Currently, the stock is hovering around downward sloping trendline resistance since the last four weeks. 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 positive, as the stock is trading above its weekly pivot and above its short-term moving averages, i.e. 20-day EMA, 50-day EMA and 100-day EMA. The 14-period daily RSI is currently quoting at 57.19, and it is trading above its 9-day average. The daily stochastic has recently given a positive crossover. The daily ADX is currently quoting at 24.59. The -DI is below the +DI. This shows the technical strength in the stock.

Going ahead, it’s important for the stock to sustain and close above the zone of Rs. 410- 415 level as it is the confluence of downward sloping trendline resistance and 200-day exponential moving average. Any sustainable move above the level of Rs. 415 is likely to open up gates for further rally towards levels of Rs. 445, followed by Rs. 460. While on the downside, the stock has crucial support in the zone of Rs. 395 - 390 as short-term moving averages are placed in that region.