Technical Analysis 1. Market Summary (as of July 11, 2014)

Nepse at close last week (July 10, 2014) = 1023.47 Nepse high last week (July 10, 2014) = 1023.47 Weekly Change = 50.62 points (or 5.20 %) Daily Volume (Avg.) = NPR 65 crores Total Traded Amount (weekly) = NPR 3.25 billion Immediate Support = 982.12 Immediate Resistance = 1057.36 RSI = 89.68 MACD Line = 34.18 Signal Line = 28.47

2. Market Trend

The market made significant progress this week as it leaped by 5.20% this week to settle at 1023.47 points. This is the biggest weekly percentage gain witnessed in 2014 as Nepse increased by a massive 50.62 points. The average daily volume increased from NPR 63.77 crores to NPR 65 crores this week as Nepse witnessed a total turnover of NPR 3.25 billion. On average, there were approximately 149 scrips being traded each day. Riding on such high volume, Nepse was able to break past the 1,000 point mark for the first time in 6 years – giving way to one of the biggest rallies observed in recent times. The benchmark index currently stands well above its 50-day moving average and is diverging away from its trendline. This indicates high momentum in the market with significant buying pressure.

Nepse (Jan 01, 2014 – July 10, 2014)

3. 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. Continuing with the trend from the previous week, the RSI once again saw gradual increases this week. The RSI ended the previous week at 82.79 levels, and it kept moving higher as the current week progressed – closing at 89.68 levels. This shows that the market is trending in highly overbought zone.

RSI (Jan 01, 2013 – July 10, 2014)

4. 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. During this week, both the MACD and Signal lines moved in the upward direction and closed at 34.18 and 28.47 points respectively. However, the MACD line increased at a faster rate when compared to the Signal line suggesting an increased short-term momentum in the market.

MACD (Jan 01, 2013 – July 10, 2014)

5. 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. With the significant rise of Nepse this week, the index once again moved past the upper band resulting in greater divergence of the two bands. This has implicated increased volatility in the markets in recent times as well as overbought scenario.

Bollinger Bands (Nov 04, 2013 – July 10, 2014)

Overview: Nepse witnessed another high this week as the market increased by 50.62 points (or 5.20 %) to close at 1023.47 points. This is the biggest percentage gain witnessed in the ear 2014. The average daily volume crossed NPR 65 crores with a huge weekly turnover of NPR 3.25 billion. The 50-day moving averages and trendlines still confirm a long-term bull trend. In the near term however, the RSI shows a highly overbought scenario in the market as it currently stands at 89.68 levels. The MACD line diverging away from the Signal line indicates an increased positive momentum in the market. The Bollinger Bands suggest increasing volatility in the markets despite remaining in the overbought zone. The overall market sentiment has been highly bullish in recent times with the next resistance while the next resistance level stands at 1057.36 points. The market may witness some volatility in the near term.

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Nepse (Jan 01, 2014 – July 10, 2014)

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RSI (Jan 01, 2013 – July 10, 2014)

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Bollinger Bands (Jan 01, 2013 – July 10, 2014)

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