Technical Analysis 1. Market Summary (as of Oct 23, 2014)

Nepse at close last week (Oct 22, 2014) 928.99

Nepse high last week (Oct 22, 2014) 928.99

Weekly Change 5.40 (or 0.58 %)

Daily Volume (Avg.) NPR 23.51 crores

Total Traded Amount (weekly) NPR 94.02 crores

Immediate Resistance 972.17

Immediate Support 917.58

RSI 50.92

MACD Line - 4.27

Signal Line - 8.43

2. Market Trend

Nepse (Jan 01, 2014 – Oct 22, 2014)

In 2014, the secondary market reached its highest point on July 21, 2014 where it had closed at 1083.55 points. However, since then, the market faced a major correction and finally found a support level at 866.25 points. Since then, the market has been stabilizing in recent times. This past week, Nepse followed a similar trend to that of the week before where the market remained relatively flat, yet managed to eek out positive gains. As a result, Nepse increased this week by 5.40 points (or 0.58%) to close at 928.99 points. Volume showed minor signs of improvement as the average daily volume increased from NPR 21.18 crores to NPR 23.51 crores this week. The Nepse line is moving towards touching the 50-day moving average in the near term. If the index crossed above the moving average, this would provide a buy signal in the market.

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. The RSI witnessed a small increase of 2.40 points to end at 50.92 levels. The RSI has closed at 48.52 levels the week before. This shows a very neutral market in recent times where there has been neutral buying and selling pressure in the market.

RSI (Dec 01, 2013 – Oct 22, 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. The MACD and Signal lines have both been gradually moving upwards indicating that the momentum has been in the positive direction in recent times. At present, the MACD and Signal lines stand at – 4.27 and – 8.43 points respectively. If the MACD line crosses above the zero line, this would indicate a buy signal.

MACD (Dec 01, 2013 – Oct 22, 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. Currently, the Nepse line has been hovering slightly above the mid-band and maintaining within that level. The upper and lower bands have also been trending sideways due to low volatility in the market. This is indicative of a very neutral market.

Bollinger Bands (Dec 01, 2013 – Oct 22, 2014)

Overview: Similar to that of the previous week, Nepse once again hovered in the sideways direction. By the last day of the trading week, the stock market added 5.40 points, an increase of 0.58%, to close at 928.99 points. The market has been following a sideways trend in recent weeks, which has helped the market stabilize in the near term. However, Nepse is moving towards the 50-day moving average. If it crosses above this moving average, it would indicate a buy signal. The average daily volume saw a minor increase to NPR 23.51 crores from NPR 21.18 crores the week before. The RSI inched up slightly this week to 50.92 levels indicating that the market has been very neutral in recent times. The MACD line is moving closer to the zero line, which upon crossing above would indicate a buy signal. The Bollinger Bands show low volatility in the market. Overall, the market may buck a sideways trend unless there is a significant change in market volume.

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Nepse (Jan 01, 2014 – October 22, 2014)

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RSI (Jan 01, 2013 – October 22, 2014)

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MACD (Jan 01, 2013 – October 22, 2014)

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