Nepse Weekly Technical Analysis August 30 - September 3, 2015

1. TECHNICALANALYSIS
1. Market Summary (as of September 3, 2015)
NEPSE at close last week (September 3, 2015) 1169.40
NEPSE high last week (August 31, 2015) 1200.15
Weekly Change -14.36 points (or -1.20%)
Daily Volume (Avg.) NPR 63.61 crores
Total Traded Amount (weekly) NPR 254.43 crores
RSI 66.30
MACD Line 43.15
Signal Line 47.42
2. Nepse Figure
Nepse (June 1, 2014 – September 3, 2015)

2. 3. Trend Analysis
Nepse followed a side-ways movement last week as it followed an upward and downward trend. The
benchmark index started the week by ending in the green. However it landed in the red territory for the rest of
the week. The index made a Double Top at 1200 level, with the support of 1175. At the end of the week, it
broke down the immediate support of 1175, signifying that Nepse is possibly at a down trend. However,
looking at the size of the structure (M-shaped double top), the down trend may not be a long-term one.
Usually, double top causes the index to fall by twice its gap between the top level and the support level (1200
– 1175)*2, which comes to 1125. Last week’s trend gave the market some corrections. However, considering
the recent bullish momentum, if the market reverses from last week’s trend, it will break its previous height of
1200.
4. Resistance and Support
Immediate Support 1150
Support 2 1125
Immediate Resistance 1200
Resistance 2
At the end of last week, Nepse fell below its previous support level of 1175, and ended at 1169.40. It’s no
surprise that the market would follow a downtrend after experiencing such a tremendous growth within a
short time period. The current resistance stands at 1200 and the support level stand at 1150.
Note: As per NRB directives, BFI’s are discouraged to announce cash dividend, causing investors to be
optimistic regarding the banks announcement of bonus and right shares. Hence, this may not cause the index
to take a heavyv downfall. Currently, Citizens Bank, Sanima Bank, and Kamana Bikash Bank, have
announced attractive bonus shares to its shareholders. Hence, further announcements may reverse the market
to go up again.
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 line experienced a steady fall throughout last week. The signal line however remained stable
for most of the week. The macd line crossed below the signal line towards the end of last week, signifying
a bearish outlook of the market. By the end of the week, the macd and signal lines ended at 43.15 and
47.42 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 last week, stood at 81.04 level, suggesting high buying pressure. Through
the course of the week, it fell significantly to end at 66.30 level. It fell by a staggering 14.74 points. This
shows that the buying pressure in the market is slowing down.
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 moved in a downward direction for most of last week, and moved closer towards
the mid band. Currently, Nepse is hovering between the upper and mid bands. However, it has moved
much closer towards the mid band, indicating a decrease in the overbought condition in the market. High
level of market volatility still exists as the distance between the upper and lower band is still wide.
6. Volume Indicator (On-Balance Volume)

4. 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.
Last week, the OBV (On-Balance Volume) took a downward direction when the benchmark index fell as
well. The volume increased last week, supporting the fall in Nepse. The average weekly volume transactions
increased slightly to NPR 63.61 crores from NPR 50.10 crores the week prior.
7. Overview
The Nepse index lost 14.36 points (or down 1.20%) last week to close at 1169.40. It’s no surprise that the
market would follow a downtrend after experiencing such a tremendous growth within a short time period
The 50-day moving average (MA) is still moving upward at a steep rate, and also moving above the 200-day
MA, indicating that the overall outlook of the market looks good. The average weekly volume transactions
increased slightly to NPR 63.61 crores from NPR 50.10 crores the week prior. The RSI ended at 66.30 level,
which shows that the buying pressure in the market is gradually decreasing. The Bollinger bands still show
prevalence of high market volatility as the distance between the upper and lower bands is comparatively wide.
The new support and resistance level now stands at 1150 and 1200 respectively.

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