Nepse Weekly Technical Analysis August 23 - August 27, 2015

1. TECHNICALANALYSIS
1. Market Summary (as of August 27, 2015)
NEPSE at close last week (August 27, 2015) 1183.76
NEPSE high last week (August 23, 2015) 1184.67
Weekly Change -17.16 points (or -1.43%)
Daily Volume (Avg.) NPR 50.10 crores
Total Traded Amount (weekly) NPR 250.51 crores
RSI 78.88
MACD Line 50.85
Signal Line 48.46
2. Nepse Figure
Nepse (June 1, 2014 – August 27, 2015)

2. 3. Trend Analysis
Nepse ended on a bearish note for most of last week. However, the market ending in the red for most of last
week is due to various market corrections. The volume transaction does not support the bearish move of the
market as the volume turnover decreased significantly as compared to the turnover during the bullish period.
The index lost 17.16 points (or down 1.43%) last week, to close at 1183.76. The benchmark index is still
moving above the 50-day and 200-day moving average at a higher rate, indicating that the overall market
trend looks good.
4. Resistance and Support
Immediate Support 1175
Support 2 1130
Immediate Resistance 1250
Resistance 2
The lowest Nepse fell to last week was at 1175.57, and the highest level it reached is at 1184.67. It will not be
a surprise for the market to surpass the resistance level of 1250 as the bullish trigger is still present in the
market. The support level of 1175 will stay strong since it was an old high of the index. The new support and
resistance level stands at 1175 and 1250 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.
The Macd line is still moving above the signal line. However, the distance between the lines has
decreased steadily. The Macd line did not gain as much where as the signal line increased throughout the
week. By the end of the week, the macd and signal lines ended at 50.85 and 48.46 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. Last week, the RSI fell significantly and hovered around late 70 and early 80 level, which still indicates
high buying pressure in the market. The RSI at the beginning of last week was at 82.22 level. Towards the
end of the week, it fell by 3.34 points to end at 78.88 level.
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 came below the upper Bollinger band last week. The index is still between the
upper and middle band. The bands also show prevalence of over-bought condition in the market. The
distance between the upper and lower band is still wide, signifying high market 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. In the course of last week, the On-Balance Volume (OBV) did not support the fall experienced by Nepse.
This shows that the market is going through its correction phase and is unlikely to trigger a bearish
movement. The average weekly volume transactions fell to NPR 50.10 crores from NPR 80.33 crores the
week prior. The market ended in the green on the last trading day of last week, and its volume transaction was
82.47 crores, which is higher as compared to last week’s average volume turnover.
7. Overview
The Nepse index lost 17.16 points (or down 1.43%) last week to close at 1183.76. This fall in the benchmark
index is due to various market corrections. The investors are booking investment profits as a result of an
expanding bull market. The 50-day moving average (MA) is still moving upward at a steep rate, and also
moving above the 200-day MA, showing a bullish attitude in the market. The average weekly volume
transactions fell to NPR 50.10 crores from NPR 80.33 crores the week prior. The OBV does not support the
fall in the index last week, signifying that the market trend looks good. The RSI ended at 78.88 level, still
indicating a strong buying pressure in the market. The Bollinger bands also show prevalence of high market
volatility as the distance between the upper and lower bands is widen. The current support and resistance level
stands at 1175 and 1250 respectively.

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