Hindalco Industries feature as Bollinger Band Squeeze pick

The stock of Hindalco 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 had formed a reversal Doji candlestick pattern as on March 24, 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 four 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.

Currently, the stock is trading above its 20-day EMA, 50-day EMA and 100-day EMA level. The leading indicator RSI hovers on the daily timeframe in the neutral region without any bias and the daily ADX is declining since the last seven trading sessions. This indicates the lack of a clear trend. Other indicators are also mirroring the same image.

Going ahead, it is important for the stock to sustain and close above the resistance zone of Rs 151.60-152 level. A sustainable move above the level of Rs 152 is likely to open up gates for a further rally towards its prior high of Rs 160, followed by Rs 169.10. While on the downside, the stock has strong support in the zone of Rs 144-Rs 142 level, as it is the confluence of upward sloping trendline support and 100-day EMA level.