Weekly Technical Analysis of Nepse index for week Apr 20 to Apr 25 2014

1. Technical Analysis
1. Market Summary (as of Apr 25, 2014)
Nepse at close last week (Apr 23, 2014) = 820.38
Nepse high last week (Apr 23, 2014) = 820.38
Weekly Change = 9.26 points (or 1.14 %)
Weekly Volume (Avg.) = NPR 274,404,993
Total Traded Amount (weekly) = NPR 1,097,619,972
Immediate Support = 753.17
Immediate Resistance = 831.86
RSI = 64.39
MACD Line = 6.83
Signal Line = 5.31
2. Market Trend
After a 0.03% drop in Nepse the previous week, Nepse sprung back into the green zone with a 9.26
points gain (or 1.14%) this week to end at 820.38 points. This surpassed the 818.58 points, which was
reached just six trading days earlier. However, the secondary market witnessed a decline in volume
averaging NPR 27.4 crores compared to NPR 30.7 crores the week before. At present, Nepse is very
close to breaching above the resistance level of 831.86 points, which has been acting as a strong
barrier for the market uptrend. If the market clearly moves past this resistance level, it would
indicate a very bullish market sentiment. For the near term, it is crucial for Nepse to maintain above
the 50-day moving average.
Nepse (Jan 01, 2014 – Apr 25, 2014)

2. 3. 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. With the rise in Nepse, the RSI indicator also
made a slight jump to 64.39 levels, which is an increase of 4.86 points from the previous week. This
can be attributed to a minor increase in buying during the last two days of the trading week. Though
there is still a possibility for upward momentum, Nepse is getting close to reaching the overbought
zone.
RSI (Jan 01, 2013 – Apr 25, 2014)
4. 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. This past week, the
MACD line and Signal line both increased to 6.83 points and 5.31 points from 6.39 points and 3.78
points respectively. This oscillator still indicates a positive bullish trend as the MACD line and Signal
line are both keeping up with the upward momentum however at a slower pace.
MACD (Jan 01, 2013 – Apr 25, 2014)
5. Bollinger Band
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. Nepse retraced slightly this week from the
upper band; however, it began climbing back up during the last two trading days. Though this
indicates a slight overbought scenario, it also represents a rising momentum.

3. OBV (Nov 04, 2013 – Apr 25, 2014)
Overview:
The stock market recovered this past week as Nepse gained 9.26 points (or 1.14 %) to end on a
positive note. The total market volume declined to NPR 1.10 billion this week, as investors seem to
be in a wait-and-see mode. However, there has been high demand for life-insurance stocks in the
past few months due to superior dividend declaration. The RSI increased slightly by 4.86 points
pushing it closer to the overbought zone. The MACD oscillator indicates that the momentum is in the
upward direction, whoever, at a slower rate. The Bollinger Bands represent a slightly overbought
scenario with increasing momentum in the near term. All these indicators suggest a fairly neutral
market with minor volatility. If Nepse manages to shoot past the resistance level of 831.86 points,
this would suggest a bullish scenario for the market.