- The Nepse index declined 1.66 points (0.11%) last week to close at 1355.48 as the market entered a correction phase after a long bull run. - Most indicators like the MACD, RSI and Bollinger bands signal that the overall market condition remains positive despite the recent dip. - Support remains at 1350 and resistance at 1390 as the market may see further correction in the coming week.

1. TECHNICAL ANALYSIS
1. Market Summary (as of March 31, 2016)
NEPSE at close last week (March 31, 2016) 1355.48
NEPSE high last week (March 27, 2016) 1377.33
Weekly Change -1.66 points (or -0.11%)
Daily Volume (Avg.) NPR 77.77 crores
Total Traded Amount (weekly) NPR 388.85 crores
RSI 70.14
MACD Line 26.94
Signal Line 26.74
2. Nepse Figure
Nepse (June 1, 2014 – March 31, 2016)

2. 3. Trend Analysis
The Nepse index entered the correction phase after a long period of bullish run. The index lost 1.66 points (or
down 0.11%) to close at 1355.48 last week. Nepse ended in the red throughout the week apart from Sunday.
The bullish momentum is still present in the market as the volume witnessed last week does not support the
slide in the index. SEBON also published a notice regarding the stock market and how investors should be
cautious while investing in the secondary market. Such news might have caused investors to be more
selective. The 50 days moving average is still running above 200 days moving average, indicating that Nepse
is still on a bullish trend.
4. Resistance and Support
Immediate Support 1350
Support 2 1257
Immediate Resistance 1390
Resistance 2
The Nepse index declined for most of last week. However it still remains above the immediate support
level of 1350. The immediate resistance level of 1390 remains the same. Nepse could still take correction
next week.
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, at the beginning of the week, stood at 27.86 and 24.64 respectively. The
lines have converged again, where the average difference between the lines is 2.32. Towards the end of
the week, the macd and the signal line closed at 26.94 and 26.74 respectively. The macd indicator still
show negative divergence as it continues to move in a straight direction during the Nepse index’s bullish
run.

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 reached its peak of 89.33 level at the beginning of last week. In the course of the week, it
dropped by 19.19 points to close at 70.14 level. This shows that the market is slowing down in its buying
frenzy, and gradually moving away from the over-bought condition.
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 finally moving away from the upper Bollinger band, signifying a decrease in the
buying pressure in the market. The middle band could act as a support level to the Nepse index. The
upper and lower bands continue to widen, indicating an increase in 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

4. 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.
The On-Balance Volume (OBV) decreased along with the decline in the Nepse index. This supports the
bullish momentum present in the market. The volume transaction reached NPR 1,142,629,502 when
Nepse gained by 20.19 points on Sunday of last week, further showing the market to be positive. The
average weekly volume transactions decreased to NPR 77.77 from NPR 86.24 crores the week prior.
7. Overview
The Nepse index ended in the red throughout last week apart from Sunday. It lost 1.66 points (or down
0.11%) to close at 1355.48. The index is going through its correction phase. The 50-day and 200-day moving
average continue to climb up along with the benchmark index, indicating that the overall market condition
looks good. The macd line is just above the signal line, supporting the bullish sentiment in the market.
However, the lines continue to move in a straight line, showing negative divergence. The RSI has dropped
significantly and is hovering around the early 70’s level, signifying a fall in the buying pressure in the market.
The Bollinger bands also show a decrease in the buying pressure, and a moderate increase in the market
volatility as the distance between the upper and lower bands has diverged slightly. The support and resistance
level stands the same at 1350 and 1390 respectively.

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