KPIT Technologies features as Bollinger Band Squeeze pick

The stock of KPIT Technologies 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 Homing Pigeon candlestick pattern as on the weekend of April 03, 2020, and thereafter, marked the sequence of higher tops & higher bottoms. From the low of Rs 34.35, which was registered on March 26, 2021, the stock has witnessed a nearly 333 per cent upside. However, after registering the high of Rs 148.65, the stock has witnessed a minor correction. During the corrective phase, the volume activity was mostly below the 50-day average volume. This indicates that it is just a routine correction after a robust upward move.   

Considering the daily chart, the stock is oscillating in a small range for the last 21 trading sessions. However, as of now, the price action has narrowed substantially, and the stock is likely to give a consolidation breakout in the coming days. Due to the narrow range, the Bollinger Bands, which was developed on the basis of the last 20 days’ 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 60-50 zone. The ADX is currently quoting at 13.04 and it is in a falling mode. 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 130-Rs 126 level is a crucial support area, and the level of Rs 142-Rs 145 is the resistance zone. A sustainable move on either side would lead to a trending move.