Is this week's downfall an indication for a continuation of the major downtrend ? Weekly technical Analysis of NEPSE index: Know here

Fri, Oct 5, 2018 5:03 PM on Latest, Stock Market, Technical Analysis, Weekly Analysis,

NEPSE index movement: Market was bearish this week, index kept on losing points. On the first trading the index was down by 10.47 points, on Monday index lost 18.04 points, on Tuesday index was up by 2.69 points, on Wednesday index continues its fall thus, lost 10.76 points and on Thursday index was down by 3.23 points. This week's downfall, after a few week's uptrends creates a confusion among the investor. 

Technical Analysis

Candlestick pattern: On a daily candlestick pattern was not observed and on the weekly basis, a type of bearish marubozu has observed. Bearish marubozu supports the downtrend but marubozu prediction strength in NEPSE is weak.

EMA: We have used EMA's of 5 days' time period (blue line), 20 days' time period (red line).

    (Picture of Volume, MA's and NEPSE daily candlestick is taken from SS Pro )

The NEPSE's value is below both EMA's and 5 days EMA is intersecting the 20 days EMA from upward. If NEPSE makes single bearish candle then we could see a dead cross and taken can be taken as the early signal for the downtrend.

Volume: Volume had decreased day after another, the decreasing volume supports the bearish trend. Looking at the last 3-4 months average volume, this week's volume is relatively higher but it has decreased by more than 50% compared to last week's volume.

Bollinger Band: Nothing special is observed from the Bollinger bands.

(Picture of Bollinger Bands, RSI with NEPSE index daily candlestick pattern, taken from SS Pro)

RSI: Last week, RSI had touched the over-bought position of 70 and this week it has come down to 49 points. For this week, the strong signal was not observed from the RSI.

MACD: MACD line (blue) is positive and it is at around 9 points which shows the market is still positive, however, the signal line (red line) had crossed the MACD line which shows market could fall further in upcoming days.

(Picture of MACD with the NEPSE index daily candle-stick pattern, taken from the SS Pro)

Fibonacci retracement method: In the last two months, market moves from the low of 1162 points to the high of 1289 points and currently it started to move downward. We can say that in the past two months the market had gained 127 points. Whenever stock moves beyond the 61.8% of major movement(i., 127) then we can say that the trend has reversed.

We can see from the picture above that index had moved around 50% of the 127 points after hitting the high of 1289 points. Thus, the short-term trend is upward till index stays above the 1210 points. If the index goes beyond the 1190 level then we can that the short-term trend has reversed.

Support and resistance level for next week according to Pivot Point.

Pivot Point-1238.82 points

1st Resistance-1256 point                1st support-1209 point

2nd Resistance-1285.25 point          2nd support-1192.97 point

Conclusion: All major indicators are supporting for the downtrend.

Prediction: Low volatile downtrend.

This week's market statistics:

Index Open-1267.18 points                Index closed-1227.37 points

Index High- 1267.76 points                 Index low- 1221.33 points

This week index had lost 39.81 points (3.14%).