Marico Limited features as Bollinger band squeeze pick

Marico Ltd 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 had formed reversal Doji candle as on the weekend of January 11, 2019 and thereafter witnessed correction. The correction is arrested near 100-day EMA and thereafter the stock is consolidating in range of Rs. 330- 350 since the last six weeks. However, as of now, the price action has narrowed substantially and the stock is likely to give a breakout in the coming days.

 The indicators and oscillators are too poor to comment on, however, the Average Directional Index (ADX) indicator on the daily time frame quoted around 14.37, which suggests no strength in any directional momentum.

 A consolidation breakout or breakdown below some important support/resistance level with supportive volumes will lead to the major advance or decline. For the short-term, Rs. 350 level will be the crucial resistance for the stock. A follow-through move above this level would lead to an extension of the pull-back toward Rs. 370, followed by Rs. 385. While on the downside, the level Rs. 330 will be the immediate support, failure to hold this support would lead to further correction up to the level of Rs. 295.