Reliance Industries features as Bollinger Band Squeeze pick

Reliance Industries 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 ‘bullish pin bar’ 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.

The major trend of the stock is bullish, as it is trading above its long and short-term moving averages, that is, 50-day, 100-day, and 200-day EMA. The leading indicator, 14-period daily RSI hovers in the neutral region without any bias and the daily ADX is currently quoting at 14.05. 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 2,047-Rs 2,000 level is a crucial support area and the level of Rs 2,170-Rs 2,200 is the resistance zone. A sustainable move on either side would lead to a trending move.