Monthly Technical Analysis of Nepse (25 June to 24 July 2017)

  3 min 54 sec to read

Nepse above Moving Averages

Trend Analysis
The benchmark index gained 69.59 points (or up 4.44%) to close at 1629.08 last month. Events such as release of monetary policy and talks regarding online trading system were witnessed in the course of last month. The index remained below the 50-day, as well as 200-day moving averages during the first half of the month, giving a bearish signal. However, towards the second half of the month, the index bounced back up, surpassing both the moving averages. The average volume turnover increased to NPR 77.69 crores from NPR 63.81 crores the month prior. 

Resistance and Support

The benchmark index fell as low as 1541.28 last month. Nepse hovered between the support and resistance level of 1545 and 1645 respectively for majority of last month. The current support and resistance level stands the same. 

Nepse Trend Indicator
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 -16.76 and -13.33 respectively. In the course of the month, both macd and the signal line climbed up by 29.36 and 17.66 points to close at 12.60 and 4.33 respectively. The macd indicator gave a bullish trigger towards the middle of last month by crossing over the signal line. Both the lines entering the positive territory also supports the bullish trigger.

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 41.02 level. Towards the end of the month, it increased by 22.26 points to close at 63.27 level. Increase in RSI shows that the market experienced a rise in buying pressure in the course of last month. Climbing further up towards the 70’s zone would indicate over-bought condition.

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 has climbed up towards the upper band, indicating a shift from the selling pressure towards the buying pressure in the market. The distance between the upper and lower bands has increased, signifying a rise in market volatility. 

The benchmark index climbed up by 69.59 points (or up 4.44%) to close at 1629.08 last month. The index has surpassed the 50-day, as well as 200-day moving average, giving a bullish trigger in the market. The macd indicator supports the bullish trigger as macd and signal line is in the positive territory, where the macd is moving above the signal line. The rise in RSI indicates buying pressure in the market. Further rise towards the 70’s level would signal over-bought condition. The bollinger bands indicate a rise in market volatility as a result of divergence in upper and lower bands. The support and resistance level stands the same at 1545 and 1645 respectively. 

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