Sadbhav Engg features as Bollinger Band Squeeze pick

Sadbhav Engineering Limited was picked by our Bollinger Band squeeze scanner which suggests that the stock is near a consolidation breakout. The Bollinger Band squeeze occurs when volatility falls to low levels and the Bollinger Bands narrow. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

 The stock had formed reversal spinning bottom candle near the horizontal support as on the weekend of February 22, 2019 and thereafter the stock gave a sharp rise up to its multiple resistance zone of Rs. 250-Rs 260. The stock could not breach the zone and for the last four weeks, it was hovering around the resistance zone. As of now, the price action has narrowed substantially and the stock is likely to give consolidation breakout in the coming days.

 The short and long-term trend is positive, as the stock is trading above its 20-day EMA, 50-day EMA, 100-day EMA and 200-day EMA. Among the momentum indicators, the 14-period RSI cooled off after touching 78 zone and at present its reading is 58.56. The fast stochastic line is trading above its slow stochastic line. The Average Directional Index (ADX) and +DI is above the -DI, which indicates positive strength in the stock.

 In the near-term, the zone of Rs. 252 to Rs. 255 is likely to act as an immediate resistance as the downward sloping trendline is placed in this region. A decisive close above this level would lead to an extension of the pull-back toward Rs. 290, followed by Rs. 305. While on the downside, the level Rs. 241 will be the immediate support which is 200-day EMA, failure to hold this support would lead to further correction up to the 100-day EMA which is currently placed at Rs. 222.50.