ADANITRANS features as Bollinger Band Squeeze pick

Adani Transmission 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 volatility falls to lower levels and the Bollinger Bands narrow. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline.

The stock had given a breakout of ascending triangle pattern as on weekend of October 27, 2019 and thereafter, marked the sequence of higher tops and higher bottoms. Considering the weekly time frame, the stock is in a range of 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.

Currently, the stock is trading above its 50-day EMA (325.05), 100-day EMA (304) and 200-day EMA (274), which indicates a medium and long-term uptrend. But the leading indicator RSI on daily time frame hovers in the neutral region without any bias. The daily ADX is below 15 and +DI is just above the –DI by a narrow margin. This clearly indicates that the stock lacks 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 347-350 level. A sustainable move above the level of Rs 350 is likely to open up gates for a further rally towards its prior high of Rs 366.40, followed by Rs 380. While on the downside, the stock has a strong support in the zone of Rs 325-Rs 320 level, as it is the confluence of upward sloping trendline support and 50-day EMA level.