COLPAL features as Bollinger Band Squeeze pick

Colgate-Palmolive (India) Limited has been picked up 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.

After registering all time high, the stock has witnessed correction. The correction is halted near 38.2 per cent Fibonacci retracement of its previous upward move (Rs 1,103.05- Rs 1,642.60). Considering the weekly timeframe, the stock is trading in contracting consolidation from the last four weeks and formed four indecisive candles. However, as of now, the price action has narrowed substantially and the stock is likely to give a consolidation breakout in coming days.

The major trend of the stock is bullish, as it is trading above its weekly pivot and above its long-short term moving averages, that is, 20-week, 50-week, 100-week, and 200-week EMAs and these moving averages are exactly in an ascending order, which suggests that the trend is strong. The leading indicator, 14-period weekly RSI continues to remain flat for five weeks, indicating absence of the strength. Nonetheless, the weekly momentum oscillator stochastic is scaling up, indicating an upside momentum.

Talking purely about the trading levels, the zone of Rs 1,445-Rs 1,435 level is a crucial support area and the level of Rs 1,490-Rs 1,500 is the resistance zone. A sustainable move on either side would lead to a trending move.