Nepse Weekly Technical Analysis 14 June - 18 June, 2015

1. TECHNICAL ANALYSIS
1. Market Summary (as of June 18, 2015)
NEPSE at close last week (June 18, 2015) 924.60
NEPSE high last week (June 15, 2015) 933.73
Weekly Change -13.36 (or -1.43%)
Daily Volume (Avg.) NPR 19.72 crores
Total Traded Amount (weekly) NPR 98.62 crores
RSI 48.93
MACD Line 1.38
Signal Line -0.89
2. Nepse Figure
Nepse (Jan 01, 2014 – June 18, 2015)

2. 3. Trend Analysis
Nepse at the beginning of last week closed at 928.35. By the end of the week, it had made corrections by
small margin to end at 924.60. Nepse moved along with 180 moving average (MA) for the majority orf last
week, signifying that the 180 MA remains supportive to Nepse’s trend and acting as an immediate support
level. Although Nepse fell most of this week due to various corrections, it is still at an up-trend momentum.
4. Resistance and Support
Immediate Support 919
Support 2 910
Immediate Resistance 938
Resistance 2 972
If Nepse’s downfall continues and falls below support level of 919 on the historical price level, its next trend
line support stands at 910. However, believing that the current downfall is due to various trend corrections,
Nepse might possibly bounce back and cross over its immediate support level, in which case its next
resistance level stands at 972.
5. Nepse Trend Indicator
a.) Moving Average
180 days moving average works as an immediate support to the Nepse’s trend. Last week, 5-day moving
average crossed below 180-days moving average on the last day of trading. However, the 5-days moving
average closed above 20- days moving average, indicating that Nepse is still on short term bullish trend.
However, 5-days MA cross down below 20-days MA could reverse the bullish trend to a bearish one.
b.) MACD

3. The MACD is a momentum oscillator formed by using two different types of moving averages, which
provides specific buying or selling signals. When a MACD line crosses above the signal line, it is
considered to be a positive sign and indicates a time to buy, and vice-versa.
The Macd line stands at a positive territory and above the signal line, indicating a bullish trend. By the
end of last week, the Macd line fell down closer to zero-levels. However, until it makes a crossover below
the signal line, there are chances of it bouncing up again. The Macd and the signal lines, last week, stood
at 1.38 and -0.83 respectively.
c.) RSI
RSI is a form of leading indicator that is believed to be most effective during periods of sideways
movement. Such indicators may create numerous buy and sell signals that are useful when the market is
not clearly trending upwards or downwards.
There is a positive divergence between Nepse index and RSI level. After making higher high of 64 level,
the RSI fell back to 48.94 levels. By examining RSI’s historic data, the RSI seems to be at an up-trend in
the short-run, where as in the long-run, it could follow a down-trend.
d.) Bollinger Bands
The Bollinger Band is a technical indicator that consists of a moving average (21-day) along with two
trading bands above (upper band) and below it (lower band). The bands are an indication of volatility,
which are represented by calculating standard deviation.

4. The benchmark index continued to decline last week. However, the index closed above the mid-bollinger
band, signifying a possible bullish trend. This bullish momentum would reverse if the index drops below
the mid-band. The gap between the upper and lower Bollinger bands remains wide, indicating huge
market volatility.
6. Volume Indicator (On-Balance Volume)
On-Balance Volume (OBV) measures buying and selling pressure at the market. It acts as a cumulative
indicator that adds volume on up days and subtracts volume on down days.
Volume pressure remains positive this week, considering that Nepse declined more than the OBV indicator. The
average weekly volume transaction came down to 19.72 crores from 32.42 crores the week prior. This shows that
Nepse’s decrease last week is not entirely due to profit booking in the market, in which case the index would fall
even more and the volume should rise immensely. Last week, Nepse gained 5.23 points on Monday and volume
was 22.10 crores, which is greater than the week’s average of 19.72 crores. Hence, the volume indicator gives a
positive view of the market.
7. Overview
The Nepse index declined most of last week. Closing at 924.60, the index lost -13.36 points (or -1.43%). The
50-day moving average is still moving below the 200-day moving average. This shows that the overall
outlook of the market does not look good. However, this short term view of the market is likely due to various
Nepse corrections. The average daily market volume fell to NPR 19.72 crores from NPR 32.42 crores the

5. week prior. The RSI still stands at a neutral position, ending at 48.93 level. The Macd line is above the signal
line and at a positive zone, indicating a bullish trend. However, the Macd line bounced back on the last
trading day, which could follow a down trend. Furthermore, the index is still between the middle and upper
Bollinger bands, suggesting a bullish momentum. The immediate support and resistance level still stands at
919 and 938 respectively.

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Nepse (Jan 01, 2014 – June 18, 2015)

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