M&M Financial Services feature as Bollinger Band Squeeze pick

Mahindra & Mahindra Financial Services 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 shooting star like candlestick pattern as on February 11, 2020 and thereafter, witnessed a correction. The correction was nearly 68 per cent from the top. Considering the weekly time frame, the stock is trading in consolidation for the last five 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.

The major trend of the stock is bearish as it is trading below its long and short-term moving averages i.e. 20-day, 50-day, 100-day and 200-day EMA. The leading indicator 14-period RSI hovers on daily time frame in the neutral region without any bias and the daily ADX is declining since the last 17 trading sessions. 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 141-Rs 137 level is a crucial support area and the level of Rs 166-Rs 168 is the resistance zone. A sustainable move on either side would lead to a trending move.