Nepse Weekly Technical Analysis April 24 - April 28, 2016

1. TECHNICAL ANALYSIS
1. Market Summary (as of April 28, 2016)
NEPSE at close last week (April 28, 2016) 1464.91
NEPSE high last week (April 28, 2016) 1464.91
Weekly Change 23.24 points (or 1.61%)
Daily Volume (Avg.) NPR 92.30 crores
Total Traded Amount (weekly) NPR 461.49 crores
RSI 84.35
MACD Line 34.68
Signal Line 32.53
2. Nepse Figure
Nepse (June 1, 2014 – April 28, 2016)

2. 3. Trend Analysis
The Nepse index created history again by reaching an all time height of 1464.91 at the end of last week. The
index gained 23.24 points (or up 1.61%) in the course of the week. This shows that the bullish sentiment is
still strong in the market. Nepse also corrected itself on Tuesday of last week by declining 8.64 points (or
down 0.59%). The third quarter reports of the BFIs continue to show good results, which will increase
demand for scripts in the market.The 50 days moving average is still running above 200 days moving
average, indicating that the long term Nepse trend looks positive.
4. Resistance and Support
Immediate Support 1390
Support 2 1350
Immediate Resistance 1500
Resistance 2
The current immediate support and resistance level stands the same at 1390 and 1500 respectively. By
looking at the bullish momentum enduring in the market for a long time period, it seems that the index
could cross above the immediate resistance level in the coming weeks.
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.
The Macd and the signal line stood at 33.44 and 29.47 respectively, at the beginning of last week. This
appears to be a positive sigh as the macd line is running above the signal line. However, in the course of
the week, the distance between the lines narrowed down. Currently, the macd and signal line stands at
34.68 and 32.53 respectively.

3. 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.
The RSI at the beginning of the week stood at 88.98 points. In the course of the week, it declined 4.62
points to close at 84.35 level. The RSI indicator continues to show high buying pressure in the market.
However, it has remained above the 70’s zone for a long time period, indicating a strong bullish presence
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 is hovering close to the upper Bollinger band, signifying over-bought condition in
the market. The distance between the upper and lower bands has also diverged significantly as compared
to previous weeks, indicating an increase in market volatility.

4. 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.
As evident from the graph above, the On-Balance Volume (OBV) continues to climb up at a faster rate as
compared to the climb witnessed by the Nepse index. This increase in the OBV supports the bullish
momentum present in the market. The average weekly volume transactions increased to NPR 92.30 crores
from NPR 87.58 crores the week prior.
7. Overview
The Nepse index climbed further up in the course of last week. The benchmark gained 23.24 points (or up
1.61%) to close at 1464.91, creating a new height. The 50-day and 200-day moving averages continue to
climb up along with the benchmark index, indicating that the overall market condition looks good. The macd
is climbing up and above the signal line, which supports the optimism present in the market. However, the
distance between the lines is gradually converging. The RSI ended at 84.35 level, indicating high buying
pressure in the market. The Bollinger bands show buying pressure in the market as the index is hovering close
to the upper band. The bands also indicate an increase in the market volatility as the upper and lower bands
have diverged significantly. The support and resistance level stands the same at 1390 and 1500 respectively.

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