Monthly Technical Analysis of Nepse (April 23th 2019 – May 21th 2019)

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Golden Cross

Trend Analysis

NEPSE gained 55.2 points(or up 4.39%) to close at 1312.14 last month. Currently, NEPSE is trading above the 50 days moving average and 200 days moving average. Last month, 50 days moving average crossed the 200 days moving average from below indicating a golden cross in the market.  The average daily volume turnover has increased to NPR 94.38 crores from NPR 53.01 crores. Currently, 10 days exponential moving average is acting as strong support as NEPSE bounced back from the 10 days exponential moving average for multiple times.

Resistance and Support

In course of month, NEPSE index broke the resistance level of 1290, traded above the 1290 level and closed at 1312.14. The average traded volume was higher than the previous month indicating anincreased market participation. The immediate support and resistance have changed to 1290and 1400 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 26.56and 18.01respectively.By the end of the month, MACD line decreased by 0.65 and signal line increased by 11.39 to close at 25.90 and 29.41 respectively. The MACD line crossed the signal line from above indicating a bearish crossover in the market. However, both lines are hovering around the positive 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.

The RSI, at the beginning of last month, stood at 79.79 level. In the course of month, RSI decreasedby 12.84 points to close at 66.94. Last month, RSI fell from the 80 level, took support at the 66 level and closed at 66.94. Negative divergence can be seen on NEPSE and RSI as NEPSE formed higher high and RSI formed lower high.

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.

The on-balance volume, at the beginning of last month, stood at -9.00b level. In the course of month, it gained 2.9b points to close at -6.1b.Last month, OBV has increasedby 2.9b indicating anincrease in buying pressure in the market.

d. Bollinger Bands
The Bollinger Band is a technical indicator that consists of a moving average (20-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.

NEPSE index traded from the upper Bollinger band to the mid Bollinger band. The distance between upper Bollinger band and lower Bollinger band has decreased indicating a low volatility in the market.


 

e. Overview
NEPSE gained 55.2 points (or up 4.39%) to close at 1312.14 last month. Currently, NEPSE is trading above the 50 days moving average and 200 days moving average. Ten days exponential moving average is acting as strong support as NEPSE bounced back from the 10 days exponential moving average for multiple times.

The MACD line crossed the signal line from above indicating a bearish crossover in the market. Negative divergence can be seen on NEPSE and RSI as NEPSE formed higher high and RSI formed lower high.Last month, OBV has increased by 2.9 b indicating an increase in buying pressure in the market.

The distance between upper Bollinger band and lower Bollinger band has decreased indicating a low volatility in the market.The immediate support and resistance have changed to 1,290 and 1,400 respectively.
 

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