ICICI Pru features as Bollinger band squeeze pick

ICICI Prudential Life Insurance Company 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 reversal Bullish Engulfing candle near the double bottom zone as on the weekend of February 8, 2019 and thereafter the stock gave a gradual rise up to its resistance zone of Rs. 379-Rs 383. The stock could not breach the zone and for the last four weeks, it was hovering around the resistance zone. 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 20-day EMA, 50-day EMA,100-day EMA and 200-day EMA. The 14-period daily RSI is currently quoting at 62.36, and it is trading above its 9-day average. The daily stochastic has recently given a positive crossover. The trend strength is extremely high as the ADX is above 33 and -DI is much below the +DI and ADX.

Going ahead, it’s important for the stock to sustain and close above the resistance zone of Rs. 379-383 level. A sustainable move above the level of Rs. 383 is likely to open up gates for further rally towards levels of Rs. 420, followed by Rs. 430. While on the downside, Rs. 361- 354 is likely to act as short-term moving averages are placed in that region.