Weekly Technical Analysis of the NEPSE index; See this week's performance of the market

ShareSansar team presents the weekly technical analysis of NEPSE index.

Brief Summary of week's NEPSE index movement: This week a bullish candle had formed after the series of bearish candle stick pattern and the so formed candle closed at the highest point.  NEPSE index had lost few points in the first couple of days of the week and then turned bullish. In the last day index had gained 36 points, highest recorded gain in a single day since 23rd April 2018 . NEPSE index had recoreded gain of 25.87 points (2.15%) this week.

The indicators we have used here are Candle Stick Pattern, volume chart, Relative Strength Index (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 Bullish Marubozu and this pattern is formed when investors buys stock at any quoted price.  Bullish Marubozu indicates buyers dominance in the game. On weekly candlestick pattern no special pattern was observed but NEPSE index closed at the week's highest point that expresses the positive sentiment of an investors.

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.

NEPSE index is trading above the 5 days as well as 20 days EMA's , expressing short-term  trend is upward and but for mid-term trend we need confirmation. 180 days EMA is far above the NEPSE index value  that means the long term trend is still bearish and the longer time period EMA's are above the shorter time period EMA's which is expressing bearish sentiment in the market. So, considering the broader prospect of the market sellers are still strong in the game.

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 upper band and lower band are converging which means volatility may decrease in upcoming weeks and NEPSE is trading above the red line which means the Bollinger Band is supporting the bullish trend .

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

The good thing for this week's bull trend is that it was supported by the increasing volume.  Considering last one month volume chart, we can observed a start of the formation of U  shaped volume pattern and this pattern do support an Uptrend. Thursday's volume had abnormally increased and it is almost double comparing to average volume of last couple of week.

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. The over-sold position is taken at 30 level and over-bought position is taken at 70 level.

The purple line in the chart above shows the RSI line and the blue horizontal line in the same picture shows the over-sold position of 30. We can observe that the RSI starts its upward movement after touching the over-sold level of 30 and it is now stands just below the neutral level of 50. The important thing we observed here is that the growth of RSI is faster than the NEPSE growth. The RSI is indicating the an increase in buying pressure and the peculiar growth of RSI expressing the index growth was less as compare to the RSI.

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

The MACD line (red line) is negative which means the current market trend is bearish but as the signal line (blue dotted line) crossing the MACD line from above ( signal is below the MACD line) is signifying that there is the possibility for the trend reversal.

 Conclusion : NEPSE index turns bullish significantly by one trading day's gains (Thursday's gain). Most of the indicator is supporting the short term  uptrend for next week. The long term trend is still negative. So we could see low volatile bullish trend next week. Just looking at Thursday's NEPSE index gain don't assume the trend has changed, it could be the bearish correction.  

The strong support for the NEPSE index is in the range of 1170-1130 points and psychological level of 1200 points can also act as the support. The major resistance for the NEPSE index is in the range of 1244-1285 points.

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

The Pivot-point for this week is 1207.79.

1st resistance -  1241.02 points        1st Support -1191.17 points

2nd resistance - 1257.64 points         2nd Support -1157.94 points

This week's market statistics

Total turnover - Rs 1.33 arba

Total Transaction -20907

Total number of Traded shares - 42.54 lakhs

Open -  1198.54 points, Closed- 1224.41 points

High - 1224.41 points ,  Low- 1174.56 points.

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(Note: Nagbeli Laghubitta Bikas Bank's Price has adjusted after the 100% right share distribution)

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