Monthly Technical Analysis of Nepse (April 25th 2018 - May 24th 2018) | New Business Age - monthly business magazine in English published from Nepal
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June 2018 Stock Taking

Published on: 2018-06-11 11:56:15     145 times read    0  Comments

Dampened by KYC Effect

Trend Analysis
The benchmark index declined in the course of last month. Nepse decreased by 76.64 points (or down 4.90%) to close at 1318.22.The index moved towards 50-day moving average and still remains below the 200-day moving average. The average turnover volume decreased to NPR 40.8 crores from NPR 63.26 crores the month prior. SEBON directives to update the Know Your Customer (KYC) decreased the turnover volume in recent month.

Resistance and Support

The Nepse index has declined from 1386.47 to 1318.22 in the course of last month. Such movement shows a bearish momentum in the market. The support and resistance level stands at 1305 and 1433 respectively.

Nepse 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 last month,stood at 32.81and 16.17 respectively.Towards the middle of the month, the MACD crossed below the signal line. By the end of the month, the MACD and the signal line decreased by 31.43 and 8.47 points to close at 1.38 and 7.44 respectively. Both the lines remain in the positive territory. However, the MACD line crossed below the signal line which indicates a weak bullish momentum.

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, at the beginning of last month, stood at63.14level. In the course of the month, it lost19.48points to close at 43.67level. The RSI shows a rise inselling pressure in the market.

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 indexmoved down towards the lowerBollinger band in the course of last month. Such an indication also shows an increase in selling pressure in the market.The distance between the upper and lower bands has decreased significantly, indicating adecreasein market volatility.

Overview
The benchmark index decreased by76.64 points (or down 4.90%) to close at 1318.22 last month.The index moved towards 50-day moving average and still remains below the 200-day moving average.The RSI closed at 43.67level, indicating a rise in the sellingpressure in the market.

The Bollinger bandsindicate a decline in market volatility due to significant decrease in the distance between upper and lower bands. The support and resistance level standsat 1305 and 1433 level respectively. 


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