HCL Technologies features as Bollinger Band Squeeze pick

The stock of HCL Technologies 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 had formed a hammer-like candlestick pattern as on the weekend of March 20, 2020, and thereafter, marked the sequence of higher tops and higher bottoms. Considering the weekly timeframe, the stock is trading in a contracting consolidation for the last six weeks. However, as of now, the price action has narrowed substantially and the stock is likely to give a consolidation breakout in the coming days.

Currently, the stock is trading above its short and long-term moving average, i.e. 20-day EMA, 50-day EMA, 100-day EMA, and 200-day EMA. The leading indicator, 14-period daily RSI, hovers in a neutral region since the last nine trading sessions. The average directional index (ADX), which shows the strength of the trend, is also below the 25-mark. This clearly indicates that there is an absence of strength in the stock. Other indicators are also mirroring the same image.

Going ahead, an important zone to watch out would be Rs 730-Rs 725 on the higher side and Rs 682-Rs 675 on the downside. A break on either side would open doors for a directional move.