Indian Oil Corporation features as Bollinger Band Squeeze pick

The stock of Indian Oil Corporation Limited (IOC) 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 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 Homing Pigeon candlestick pattern as on May 19, 2020 and thereafter, witnessed a pullback rally of almost 33.79 per cent. 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 below its long-term moving averages, i.e. 100-day EMA and 200-day EMA level. The leading indicator RSI on the daily timeframe hovers in the neutral region without any bias since the last 21 trading sessions and the daily ADX is also trading below 25 mark. This clearly 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 84-Rs 83 level is a crucial support area and the level of Rs 89.50-Rs 91 is the resistance zone. A sustainable move on either side would lead to a trending move.