Possibility for bearish retracement has observed know the detail here; weekly technical analysis of NEPSE index

We have seen a strong uptrend this week. NEPSE index keeps on gaining point's day after another. On the first trading day, the index was up by 8.59 points, on the second day it has gained 15.98 points, on the third day it increases by 3.98 points, on the fourth day it gained the humongous 23.09 points but on the last day index lost 4.36 points and closed with the bearish candle. An index has gained 47.28 points making it highest single week gain since April 2018.

Technical Analysis of NEPSE index

Candle-Stick

First, four days candlestick is bullish, candle's with a long body and fewer shadows had formed. On the daily candlestick, we haven’t observed any special pattern but the bearish candle with the small body, after the series of long bull candle signifies the possibility of bearish retracement. On a weekly candlestick, the special pattern was not observed, however, the long-bodied bullish candle has formed this week.

Exponential Moving Average (EMA)

We have used two EMA's of time period 5 days (red line) and 20 days (green line).

                                                    (Picture is taken from the SS Pro)

We have observed the golden cross this week which supports the bulls and NEPSE is trading above the both EMA's which gives support to the bullish trend. The long-term trend is still bearish as 180 day's EMA is still above the NEPSE index value.

Bollinger Bands: NEPSE index is trading above the upper band of Bollinger band. The separation between the upper band and lower band is increasing which supports the volatile market.

(Bollinger Band and volume chart with NEPSE index main chart is shown above; a picture is taken from https://www.sharesansar.com/sspro )

Volume: Volume has abruptly increased comparing to the average volume of the last four months. Yesterday's turnover was around Rs 80 crore which means that the investor started entering the market however, the Thursday's volume was not able to take index higher.

RSI:   RSI was near the over-bought position of 70. As we can see from the picture below the RSI had bent before touching the over-bought position.

(MACD and RSI with NEPSE index main chart is shown above; a picture is taken from https://www.sharesansar.com/sspro)

MACD: For the first time in the last four months the MACD is positive and the MACD line (blue line) is above the signal line (red line). The space between the MACD and Signal line had increased this week.

Conclusion:  All the indicators were negative last week and this week things are totally different but in technical analysis, things have to change gradually to predict with more accuracy. For sure, we are at the end of the bearish trend but don’t assume we will directly enter into the strong bull market, in fact, the market will grow gradually. 

Prediction: We could see the bearish retracement next week. The pace of the uptrend will decrease. If the NEPSE index falls to 1210 points next week, then that can be considered as the retracement of this week's uptrend.

Support and Resistance for next week

This week index had broken the minor resistance of 1195 points and 1213 points.

An index has tested the lower boundary of major resistance of 1244-1285 but could not able to close above it. Minor support for NEPSE will be of 1213 points.

Support and resistance level according to pivot points

Pivot Point: 1218.55 points

1^st resistance – 1258 points              2^nd resistance -1287 points

1^st support   - 1190 points                 2^nd support - 1149 points

This week's market statistics

Index open – 1181.69                   Index close – 1229.77

Index High – 1247.30                       Index low- 1178.59

Total Turnover- Rs 2.88 arba

Total transaction- 32,285

Total shares traded- 1.02 crore

Turnover has increased by 259.34%, this week.