Nepse Weekly Technical Analysis 26 July - 30 July, 2015

1. TECHNICALANALYSIS
1. Market Summary (as of July 30, 2015)
NEPSE at close last week (July 30, 2015) 1027.98
NEPSE high last week (July 26, 2015) 1053.95
Weekly Change 24.6 points (or 2.57%)
Daily Volume (Avg.) NPR 61.28crores
Total Traded Amount (weekly) NPR 306.42 crores
RSI 70.51
MACD Line 25.79
Signal Line 18.06
2. Nepse Figure
Nepse (Jan 01, 2014 – July 30, 2015)

2. 3. Trend Analysis
At the beginning of last week, the market experienced an extraordinary bullish momentum. This bullish
response in the market is most likely due to the news regarding the monetary policy announcement. The
market closed at 1053.95 at 1:14PM on Sunday of last week after it faced three consecutive circuit breaks.
However, the market ended in the red for the rest of the week. This does not seem as troubling since the
market seems to be going through its correction phase. As expected, the 50-day MA has surpassed the 200-
day MA, signifying the overall market trend looks positive.
4. Resistance and Support
Immediate Support 972.17
Support 2 950.97
Immediate Resistance 1036.98
Resistance 2 1083.55
The lowest Nepse went down to last week was at 1021.33. The benchmark index surged 50.57 points (5.04%)
to end at 1053.95 on the first trading day of last week. It had surpassed its current resistance level of 1036.98
during the beginning of the week. However, it fell below 1036.98 resistance level after Nepse went through
some corrections. The current immediate support and resistance level now stands at 972.17 and 1036.98
respectively.
5. Trend Indicator
a.) 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.
Both the Macd and signal lines increased last week. The macd line is moving above the signal line and the
distance between them has increased significantly, indicating a bullish outlook of the market. This bullish
view of the market seems to continue in the coming periods. By the end of the week, the macd and signal
lines ended at 25.79 and 18.06 respectively.
b.) 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.

3. The RSI hovered above the 70-level majority of last week. It showed a period of strong over-bought
condition in the market. At the beginning of last week, the RSI was at 86.85. By the end of the week, the
RSI fell and ended at 70.51, showing that buying pressure still prevails in the market.
c.) 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.
The benchmark index remained above the upper Bollinger band most of last week, signifying buying
pressure in the market. The upper and lower bands have diverged greatly as well. This shows that the
market has increased in volatility.
6. Volume Indicator (On-Balance Volume)
On-Balance Volume (OBV) is a momentum indicator that relates volume to the current price of the index or
security. It 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. If a price increase is supported by OBV, it confirms
an uptrend, whereas if a price decrease is supported by OBV, it confirms a downtrend.

4. Last week, the On-Balance Volume (OBV) did not show clear signs of increase as compared to the spike witnessed
by the index. The OBV increased rather at a slower rate as compared to the surge in the Nepse index. However,
both the index and OBV fell as a result of various corrections. By the end of the week, both the OBV and the index
increased again. The average weekly volume transactions increased to NPR 61.28 crores from NPR 46.61 crores
the week prior. This increase in the volume transactions last week is likely due to the market sentiment of profit
booking. The turnover on Monday last week ended at a staggering 1,306,274,240.
7. Overview
The Nepse index experienced high volatility last week. It made a staggering gain of -- points (or up 4.38%)
last week to close at --. As anticipated, the 50-day moving average (MA) is moving above the 200-day MA,
indicating a bullish attitude in the market as the 50-day MA will move above the 200-day MA. The average
weekly volume transactions increased to NPR 61.28 crores from NPR 46.61crores the week prior. The RSI is
still hovering around the 70-level, indicating an over-bought condition. The Bollinger bands show prevalence
of high market volatility as the distance between the upper and lower bands have widened. The support and
resistance level still stands at 972.17 and 1036.98 respectively.

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