Wave Principle on Nepse

ShareSansar, June 2:

Sagun Shakya & Jeevan Shrestha "Technical Analyst"

Wave principle is a form of technical analysis use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices. The Wave Principle posits that collective investor psychology, or crowd psychology, moves between optimism and pessimism in natural sequences. These mood swings create patterns evidenced in the price movements of markets at every degree of trend or time scale.

According to wave principle Nepse is in 4th wave of intermediate cycle. The Intermediate cycle of Nepse is in down trend, but Primary cycle is up. The target of intermediate cycle is 811 or 770 and 1,200 of Primary Cycle. Since, 2nd wave was simple , the current 4th wave will be complex pattern. We can expect sideways trend and triangle patterns forming in near future in Nepse.

4th wave is typically clearly corrective wave. Prices may meander sideways for an extended period, Volume is well below than that of 3rd wave. This is a good place to buy a pull back if you understand the potential ahead for 5th wave. Still, 4th waves are often frustrating because of their lack of progress in the larger trend. 5th wave is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in 5th wave than in 3rd wave, and many momentum indicators start to show divergences. So, investors have to wait for the completion of 4th wave to enter into the market.