Monthly Technical Analysis of Nepse (January 26rd 2019 – February 16th 2019)

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Monthly Technical Analysis of Nepse (January 26rd 2019 – February 16th 2019)

Bearish Momentum Slowing Down
 
 
Trend Analysis
NEPSE index lost 85.21 points (or down 7.17%) to close at 1102.56 last month. Currently, NEPSE is trading below the 200 days moving average. At the beginning of the month, NEPSE breached the support level of 50 days moving average and traded below the 50 days moving average. The average daily turnover has decreased to NPR 32.25 crores from NPR 45.14 crores. NEPSE showed bearish momentum breaking the support level of38.2%,50%, 61.8% and 100% of recent upswing from 1109.32 to 1232.74. In the course of month, NEPSE formed big bearish candles indicating a bearish momentum in the NEPSE index.
 
Resistance and Support
 
 
In course of month, NEPSE index showed bearish momentum for most of the days breaking the support level of 1150. The average traded volume was lower than the previous month indicating a decreased market participation. The immediate support and resistance have changed to 1090 and 1150 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 2.62 and 2.25 respectively. By the end of the month, MACD line and signal decreased by 18.41 and 17.23 points to close at -15.80 and-14.99 respectively. At the beginning of the month, MACD line crossed the signal line from above indicating a bearish crossover in the market. Currently, both MACD and signal line are hovering around the negative zone indicating a bearish sentiment in the market. However, the distance between MACD and signal line is getting smaller indicating decrease in bearish 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 the month, stood at 53.53 level. In the course of month, RSI decreased by 19.94 points to close at 33.58. Last month, RSI decreased from the 50s zone to the 20s zone and bounced back to the 30s zone indicating a retracement from the oversold zone. Currently, 40s zone of RSI is acting as a resistance.
 
 
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 -12.1b level. In the course of month, it lost 2.7b points to close at -14.8b. Last month, OBV has decreased by 2.7b indicating a rise of selling pressure in the market. However, decrease of 2.7 b includes an abnormal volume of 1.91arba of Everest Bank promoter share at the mid of month.
 
 
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 traded from the mid Bollinger band to the lower Bollinger band. NEPSE index traded around the lower Bollinger band for most of the time indicating a bearish expansion the market. At the end of month, NEPSE index bounced back from the lower Bollinger band and closed above the lower Bollinger band. The distance between the upper Bollinger band and lower Bollinger band has increased indicating a high volatility in the market.
 
 
e. Overview
NEPSE index lost 85.21 points (or down 7.17%) to close at 1102.56 last month. Currently, NEPSE is trading below the 200 days moving average and 50 days moving average. MACD and signal line are hovering around the negative zone indicating a bearish sentiment in the market. RSI decreased from the 50s zone to the 20s zone and bounced back to the 30s zone indicating a retracement from the oversold zone. OBV has decreased by 2.7 b indicating a rise of selling pressure in the market. The distance between the upper Bollinger band and lower Bollinger band has increased indicating a high volatility in the market. The immediate support and resistance have changed to 1090 and 1150 respectively. 
 

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