Nepse Weekly Technical Analysis 21 June - 25 June, 2015

1. TECHNICAL ANALYSIS
1. Market Summary (as of June 25, 2015)
NEPSE at close last week (June 25, 2015) 930.38
NEPSE high last week (June 25, 2015) 930.38
Weekly Change 5.78 (or 0.63%)
Daily Volume (Avg.) NPR 21.17 crores
Total Traded Amount (weekly) NPR 105.86 crores
RSI 51.78
MACD Line 0.49
Signal Line -0.12
2. Nepse Figure
Nepse (Jan 01, 2014 – June 25, 2015)

2. 3. Trend Analysis
Nepse at the beginning of last week closed at 930.38. It experienced a bullish trend most of the week and its
correction phase also seem to have reversed after hitting 917.97 on Sunday. Last week, the index started at
924.60 points. A dramatic rise in the banking sector on Monday caused Nepse to enjoy modest gains. The
announcement of National Insurance Committee to raise capital of non-life insurance sector to NPR 40 billion
and life insurance to NPR 50 billion steered the market to a bullish trend. The insurance sector also gave the
benchmark index a boost at the beginning of the week. Furthermore, positive news on CDC to finalize
tentative first draft of the new constitution also caused Nepse to continue its bullish move.
4. Resistance and Support
Immediate Support 913.02
Support 2 900
Immediate Resistance 950.97
Resistance 2 972
At the beginning of last week, Nepse crossed below the immediate support level of 919 to end at 917.97.
Currently, the revised immediate support and resistance stands at 913.02 and 950.97 respectively. If Nepse is
to continue its bullish momentum, it will cross over the immediate resistance level of 950.97, and its next
resistance will be at 972. .
5. Nepse Trend Indicator
a.) Moving Average
180 days moving average (MA) has been acting as an immediate support level to Nepse index for the past
two weeks. However, the 180 MA turned into a resistance to the index last week. The index crossed
above the 180 MA line on the last day of trading. Currently, the index is between 20 and 180 days MA.

3. The 5 and 20 days MA are showing signs of bouncing upwards and crossing over the 180 MA, which is
supportive to the index.
b.) MACD
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 remained in the positive territory throughout last week. The gap between Macd and signal
line has converged significantly. The Macd at the beginning of the week was at 0.44 and it declined most
of the week. However, by the end of the week it moved back up to end at 0.49. The signal line has been
moving up all of last week to end at -0.12. It seems that it will come out of the negative zone in the
coming days, still signifying a bullish trend.
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.
The RSI was at 46.49 level at the beginning of the week. Throughout the week, it made a steady gain to
close at 51.78 level. The RSI has been moving in a neutral position for the past few weeks.
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 moved parallel with the mid bollinger band throughout last week. The index and
the mid-band seem to be moving upward, triggering a bullish momentum. Last week, the market saw a
decline in its volatility as the upper and lower bands have converged significantly.
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.

5. Last week, the On-Balance Volume (OBV) increased more than the gain witnessed by the Nepse index. This
shows that investors have a bullish outlook in the market. The average weekly volume transactions increased to
NPR 21.17 crores from NPR 19.72 crores the week prior.
7. Overview
Apart from the first day of trading, the Nepse index gained throughout last week. Closing at 930.38, the index
gained 5.78 points (or 0.63%) last week. The 50-day moving average is still moving below the 200-day
moving average, indicating 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
increased to NPR 21.17 crores from NPR 19.72 crores the week prior. The RSI still stands at a neutral
position, ending at 51.78 level. The Macd line is still above the signal line signifying a bullish trend. The
upper and lower bollinger bands have converged significantly, suggesting decline in market volatility.

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Nepse (Jan 01, 2014 – June 25, 2015)

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