Monthly Technical Analysis of Nepse (June 24th 2018 - July 22th 2018)

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Bearish Trend Continues


 

Trend Analysis
The benchmark index declined in the course of last month.

Nepse decreased by 36.80 points (or down 3.02%) to close at 1181.66. The index continues to trade below 50-day moving average and 200-day moving average indicating bearish momentum in the market.

The average volume turnover decreased to 29.66 NPR crores from NPR 34.79 crores the month prior.

Resistance and Support

The Nepse index has declined from 1219.81 to 1181.66 in the course of last month.

Such movement indicates a bearish momentum in the market.

The immediate support and resistance stands 1170 and 1305 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 -27.19 and -23.63 respectively. By the end of the month, the macd and the signal line increased by 13.16 and 7.48 points to close at –14.03 and -16.14 respectively. The macd line has crossed the signal line from below indicating possible positive momentum in the market. However, both lines are still moving in the negative territory.

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 30.49 levels. In the course of the month, it gained 5.41 points to close at 35.89 levels. The RSI hovering in the 30s zone indicates a presence of selling 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 index moved towards the lower Bollinger band in the course of last month. Such indication shows an increase in selling pressure in the market. The distance between the upper and lower bands has decreased indicating low market volatility.

Overview
The benchmark index decreased by 36.80 points (or down 3.02%) to close at 1181.66 last month. The index continues to trade below 50-day moving average and 200-day moving average indicating bearish momentum in the market. The macd line has crossed the signal line from below indicating possible positive momentum in the market. However, both lines are still moving in the negative territory. The RSI hovering in the 30s zone indicates a presence of selling pressure in the market. The Bollinger bands indicate a decrease in market volatility due to decrease in the distance between upper and lower bands. The support and resistance level stands at 1170 and 1305 level respectively. 

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