Have an in-depth knowledge of Nepalese Stock market with the weekly technical analysis of ShareSansar (with exclusive video )

We are here with the weekly technical analysis of NEPSE index. This week the NEPSE index had slipped by 19.92 points (1.63 %) and in past 8 weeks, seven weekly candle stick pattern was totally bearish. Most of the candles stick  pattern’s closed at week’s lowest point and that signifying strong negative sentiments.

On weekly candle stick pattern no special pattern was observed and on the monthly pattern ending on June, was a type of bearish marubozu that supports the bearish trend.

The indicators we have used here are volume, RSI, Exponential moving averages (EMA), Bollinger bands and MACD for the prediction. The chart we have used here is candle-stick pattern of one day time period.

Candlestick Pattern: Thursday’s candle stick pattern was a Dozi like pattern and this pattern is formed when there is indecision among the buyers and sellers.  Dozi indicates slow-down of the current trend, as per the candle stick pattern we could see indecision or bull in the beginning of next week.

EMA : Exponential moving average is used to predict continuation as well as reversal of the trend.As shown in the chart below  we have used three major EMA’s of  5 days(red line) ,20 days(green line) , and 180days(black line) period.

EMA’s are above the NEPSE index value which shows  the short-term , the long-term and  the mid-term trend is bearish.  Short time periods EMA’s are below the long period EMA’s and that  is a strong bearish signal. So the Moving averages are  giving a signal for the continuation of the trend.

Bollinger Band: Bollinger band is shown below with NEPSE index main chart. It is used to predict volatility as well as the continuation of the market trend. Bollinger band is consist of three lines viz. upper band (blue, on upper side ), lower band (blue, on the lower side) and middle line(red, on the center).

The lower band and upper band are started converging and the index is trading below the middle line. BB is indicating low volatality and continuation of the current market trend next week.

Volume: Volume chart is shown below with the NEPSE index main chart.

Both price and volume has decreased in last week. Decreased in price with decreased in volume supports bearish trend in uni-directional market like Nepal stock market and on Thursday the volume had relatively increased .

RSI: The RSI chart with NEPSE index main chart is shown below. Relative Strength Index is used to indicate over-bought (too high price) and over-sold (too low price) price of the stock and divergence in the price and RSI line.

Red Line chart in-between the two blue lines is a RSI indicator, when it touches the upper limit of 70 the stock is said to be over-bought and when it touches the lower limit of 30, it is said to be over sold.

RSI is below the over-sold position of 30 but contrary to the defination of RSI , NEPSE index  had continued trend with pace whenever the RSI crossed over-bought or over-sold position in the past. Considering past responses, the RSI  is indicating the continuation of the bearish trend. Divergence between the RSI line and price was not observed.

MACD: Chart below shows the Moving Average Convergence & Divergence with the NEPSE index main chart. MACD is used to predict market trend.

MACD line (red line) is below the neutral level and is negative further the signal line (blue dotted line) is above the MACD line which is indicating the continuation of the bearish trend.

This week’s market statics .

Open – 1218.46 points        closed – 1198.54

High – 1227 points                low -   1190.95

Conclusion- The market closed below the psychological level of 1200 points. All major indicators are indicating continuation of the bearish trend. Daily candle stick pattern is supporting the uptrend but the strength of the signal was weak. The RSI is trading below the over-sold position and that is providing strong support to the bearish trend. So next week we predict the continuation of the bearish trend with low volatility.

The strong support for the NEPSE index is in the range of 1170-1130 points and psychological level of 1200 points can act as the strong resistance.

Support and resistance level according to week’s Pivot Points.

Pivot Point – 1205.49

1^st resistance - 1220.03 points       2^nd resistance - 1241.54 points

1^st support    - 1183.98   points        2^nd support    - 1169.44 points