Monthly Technical Analysis of Nepse (22 February to 26 March 2017)

  3 min 44 sec to read

Bullish Momentum

Trend Analysis
The benchmark index experienced a remarkable climb in the course of last month. The index gained a staggering 176.26 points (or up 12.44%) to close at 1533.83. Gradual decrease in interest rates and positive hopes for political scenario seems to have caused a bullish trigger in the market. Moreover, Nepse surpassed the 50-day moving average, further supporting the bullish momentum. Such bullish run can cause the market to break 180-day MA in the coming weeks. The average volume turnover increased considerably to NPR 69.08 crores from NPR 47.59 crores the month prior. 

Resistance and Support
The benchmark index broke the support levels of 1388 and 1480 towards the end of last month. The new immediate support and resistance level now stands at 1400 and 1550 respectively. As bullish sentiment looms over the market, the index will likely break the resistance level of 1550 in coming weeks.  

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 -24.51 and -34.54     respectively. In the course of the month, both macd and the signal line climbed up by 57.52 and 45.73 points to close at 33.01 and 11.19 respectively. The macd indicator showed a bullish trigger at the beginning of the month, where the macd hovered above the signal line. Both the lines entering the positive territory also supports the investor confidence in the market.

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 45.25 level. Towards the end of the month, it increased by 32.30 points to close at 77.55 level. After 8 long months, the RSI has finally entered the overbought zone above 70 level. Entering the overbought zone suggests that the bearish sentiment has ended.

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 hovered below the middle bollinger band during the beginning of last month. However, a sudden spike in investor confidence has caused the index to rise above the upper band, indicating high buying pressure in the market. The divergence in upper and lower bands signifies presence of high market volatility. 

The benchmark index gained 176.26 points (or up 12.44%) to close at 1533.83 last month. Positive hopes for stable political environment, and steady decrease in interest rates has added investor confidence in the market. Nepse surpassed the 50 day moving average as well, further indicating a bullish trigger. The macd, as well as the signal line, has entered the positive territory, triggering a bullish momentum. The RSI closed at 77.55 level, indicating high buying pressure in the market. The bollinger bands show presence of high market volatility. The new support and resistance level stands at 1400 and 1550 respectively. 

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