HDFC AMC features as Bollinger band squeeze pick

HDFC Asset Management Company (AMC) picked up by our Bollinger band squeeze scanner suggests that the stock is near a consolidation breakout. Bollinger band squeeze occurs when volatility falls to low levels and Bollinger bands get narrower. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

The stock had formed a reversal dark cloud cover candlestick pattern as on November 22, 2019 and thereafter, witnessed correction. The correction is halted near 100-day EMA level. Considering the weekly timeframe, for 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 a consolidation breakout in the coming days.

The major trend of the stock is bullish, as it is trading above its weekly pivot and above its long and short-term moving averages, i.e. 50-day EMA, 100-day EMA and 200-day EMA. The leading indicator, 14-period daily RSI, continued to remain flat for the past ten trading sessions, indicating an absence of the strength. The daily ADX is currently quoting at 13.41. This indicates the lack of a clear trend. Other indicators are also mirroring the same image.

Talking purely about the trading levels, the zone of Rs 2,890-Rs 2,830 level is a crucial support area and the level of Rs 3,260-Rs 3,300 is the resistance zone. A sustainable move on either side would lead to a trending move.