Monthly Technical Analysis of Nepse (November 25, 2018 – December 20, 2018)

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Monthly Technical Analysis of Nepse (November 25, 2018 – December 20, 2018)

Finding a Support

Trend Analysis
NEPSE index lost 15.27 (or down 1.293%) to close at 1165.97 last month. Currently, the index is trading below the 50 days moving average and 200 days moving average. During the course of last month, NEPSE index breached the support level of 1150, reached the low level of 1120.84 forming a spinning bottom and bounced back to close at 1165.97. The average daily turnover has increased to 37.90 from 22.78. Currently, NEPSE is trading above the retracement level of 38.2% of the recent swing from 1120.84 to 1182.78. Since NEPSE is trading above the 38.2% level, NEPSE still shows the presence of bullish sentiment in the market. Last month, NEPSE was surrounded by the investor to protest against the downfall of the market.

Resistance and Support

In the course of month, the index broke the support level of 1150 and reached the low level of 1120.84. However, at the mid-month, NEPSE bounced back to break the resistance level of 1150 and closed at 1165.97. The average traded volume turnover was higher than the previous month indicating an increased market participation. The immediate support and resistance stand same at 1150 and 1210 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 -12.20 and -8.96 respectively. By the end of the month, MACD line increased by 5.82 and the signal line decreased by 3.58 to close at -6.39 and -12.52 respectively. The MACD line crossed the signal line from the below indicating a bullish crossover in the market. However, both lines are still hovering around the negative zone.

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.

RSI stood at 33.98 at the beginning of month. In the course of month, RSI gained 16.20 points to close at 50.19. RSI has shown recovery after it remained in the oversold zone for 10 days. Last month, RSI has recached the level of 57, bounced back to 49 and closed at 50. Positive divergence was seen on NEPSE and RSI as NEPSE and RSI formed higher high and higher low.

c. (OBV)
On balance volume is a momentum indicator that uses volume flow to predict changes in stock prices. It measures buying and selling pressure as a cumulative indicator that adds volume in up days and subtracts volume on down days. On balance volume at the beginning of last month, stood at -10.3 b level. In the course of month, it gained 0.6 b points to close at -9.7 b. Last month, OBV has increased by 0.6 b indicating a positive sign in the market.

d. 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.

At the beginning of the month, NEPSE index continued to move in the lower Bollinger band. However, at the mid-month, NEPSE index reversed from lower Bollinger band, breached the mid Bollinger band and reached towards the upper Bollinger band indicating a bullish momentum in the market. After the mid-month, the distance between the lower Bollinger band and upper Bollinger band has widen indicating a volatility in the market.

e. Overview
NEPSE index lost 15.27 (or down 1.293%) to close at 1165.97 last month. Currently, the index is trading below the 50 days moving average and 200 days moving average. During the course of last month, NEPSE index breached the support level of 1150, reached the low level of 1120.84 forming a spinning bottom and bounced back to close at 1165.97. The MACD line crossed the signal line from the below indicating a bullish crossover in the market. However, both lines are still hovering around the negative zone. RSI has shown recovery after it remained in the oversold zone for 10 days. Positive divergence was seen on NEPSE and RSI as NEPSE and RSI formed higher high and higher low. OBV has increased by 0.6 b indicating a positive sign in the market. After the mid-month, the distance between the lower Bollinger band and upper Bollinger band has widen indicating a volatility in the market. The immediate support and resistance stand same at 1150 and 1210 respectively. 

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