Gujarat Fluorochemicals features as Bollinger Band Squeeze pick

The stock of Gujarat Fluorochemicals 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 given a downward sloping trendline breakout as of April 09, 2021, and thereafter, marked the sequence of higher tops & higher bottoms. From the breakout level, the stock has witnessed over 184 per cent upward move. However, in the first week of August, the stock has formed Doji candle on the weekly chart and thereafter, slid into the period of consolidation along with low volume.  

Considering the daily chart, the stock is oscillating in a small range for the last 22 trading sessions. Due to the narrow range, the Bollinger Bands, which was developed on the basis of the last 20 period’s volatility, have contracted on the daily timeframe. This is an early sign of a bigger move.  

Among the momentum indicators, the 14-period daily RSI is also oscillating in the zone of 63-48. The ADX is currently quoting at 13.21 and it is in a falling mode. This indicates the absence of strength. Other indicators are also mirroring the same image.  

Talking purely about the trading levels, the zone of Rs 1,630-Rs 1,600 level is a crucial support area and the level of Rs 1,820-Rs 1,830 is the resistance zone. A sustainable move on either side would lead to a trending move.