Eveready Industries features as Bollinger Band Squeeze pick

The stock of Eveready Industries India 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.

The stock has formed a reversal bullish pin bar candlestick pattern as on the weekend of March 27, 2020, and thereafter, witnessed almost 218 per cent upside momentum. The stock has given nearly 164 per cent returns from year to date. However, after registering a high of Rs 157.95, the stock is trading in contracting consolidation, which resulted in the formation of a symmetrical triangle pattern. However, as of now, the price action has narrowed substantially and it has reached near the apex point of the triangle, which indicates that the stock is likely to give a breakout in the coming days.

Majorly, the stock is displaying a bullish trend as it is trading above its medium and long-term moving averages, that is, 50-day EMA, 100-day EMA, and 200-day EMA. The leading indicator, 14-period daily RSI, hovers in a neutral region, and the average directional index (ADX), which shows the strength of the trend, is below the 20-mark. This clearly indicates that there is an absence of strength in the stock. Other indicators are also mirroring the same image.

Talking purely about the trading levels, the zone of Rs 134-Rs 138 level is a crucial support area for the stock as it is a confluence of the lower trendline of the symmetrical triangle and 50-day EMA. On the upside, the level of Rs 152-Rs 153 is a resistance zone. A sustainable move on either side would lead to a trending move.