Technical Analysis 1. Market Summary (as of July 18, 2014)

Nepse at close last week (July 17, 2014) 1045.89

Nepse high last week (July 17, 2014) 1045.89

Weekly Change 22.42 (or 2.19%)

Daily Volume (Avg.) NPR 63.46 crores

Total Traded Amount (weekly) NPR 3.17 billion

Immediate Support 982.12

Immediate Resistance 1057.36

RSI 84.60

MACD Line 36.91

Signal Line 33.78

2. Market Trend

The secondary market rose heavily on the first trading day of the week as Nepse gained 1.5% due to expectations of budget, which was scheduled for the evening. However, after the budget announcement, the market retraced lower during the next two days. Nepse did gain few points on Wednesday and Thursday to counter the loss made on Monday and Tuesday, and closed at 1045.89 – an increase of 22.42 points or 2.19% over last week. The average daily volume this week stood at NPR 63.46 crores, which is slightly lower when compared to volume of NPR 65 crores from the week before. Similarly, the total market volume for the trading week too decreased slightly to NPR 3.17 billion. The resistance and support levels stand at 1057.36 and 982.12 points respectively. At present, the long-term trend of the market remains bullish. The trend lines and the 50-day moving average in the chart show optimistic view of investors towards the market.

Nepse (Jan 01, 2014 – July 17, 2014)

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. During the week ending July 17, the RSI closed at 84.60 levels, falling in the overbought zone. This past week, the RSI gradually consolidated from last week’s 89.68 levels. This shows that the market is trying to stabilize although it is still in overbought zone.

RSI (Jan 01, 2013 – July 17, 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. During this week, the momentum in the MACD line slowed while the Signal line continued its increasing momentum. As a result, the gap between the MACD and Signal line decreased significantly.

MACD (Jan 01, 2013 – July 17, 2014)

5. 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. Nepse declined slightly this week as it moved away from the upper band and headed towards the mid-band. However, this brought in additional buyers causing it to move towards the upper band once again. The upper and lower bands are still maintaining a widened gap suggesting that the volatility in the market has been high in recent times.

Bollinger Bands (Nov 04, 2013 – July 17, 2014)

Overview: Nepse opened this week with huge gain in the first trading day. For the remaining week, Nepse witnessed stabilization. Overall, Nepse gained 22.42 points (or 2.19%) this week to close at 1045.89 points. The average daily volume decreased slightly this week to NPR 63.46 crores from NPR 65 crores the week before. The total market volume for the week also decreased slightly to NPR 3.12 billion from last week’s NPR 3.25 billion. The next resistance and support levels for Nepse stand at 1057.36 and 982.12 points respectively. The RSI decreased this week to 84.60 levels but remained within the overbought zone. The MACD line maintained above the Signal line but began converging suggesting a decreasing near term momentum. This week, bollinger band moved towards upper band again. The widening gap between two bands suggests higher volatility in the market. Even though the long-term trends still show bullish momentum in the market, there could be near term sideways movement, thereby bringing in additional buyers into the market which could push Nepse higher.

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Nepse (Jan 01, 2014 – July 17, 2014)

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RSI (Jan 01, 2013 – July 17, 2014)

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MACD (Jan 01, 2013 – July 17, 2014)

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Bollinger Bands (Jan 01, 2013 – July 17, 2014)

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