NEPSE Closes Green, Dragonfly Doji on Chart; But Can You Anticipate a Reversal Already?

The NEPSE index closed at 2,325.45 today after gaining 4.94 from the last trading day's closing. This is a gain of 0.21%. The index had lost 36.73 points yesterday.

The index opened at 2,327.08 today and made the intraday low at 2,287. It then made the intraday high at 2,333.18 and closed at 2,325.45.

231 scrips traded hands via 36,190 transactions. Furthermore, a total of 3,991,051 shares exchanged hands amounting to Rs. 1,629 Arba in the turnover amount. This is higher than yesterday's turnover of Rs. 1.458 Arba.

NESDO Sambridha Laghubitta Bittiya Sanstha Limited (NESDO) had the highest turnover of Rs. 10.36 crores closing at a market price of Rs. 2,800 per share. The shares of Nepal Infrastructure Bank Limited (NIFRA) traded the most.

Jalpa Samudayik Laghubitta Bittiya Sanstha Limited (JALPA) and Green Ventures Limited (GVL) gained 10% and hit the positive circuit breaker for the day.

On the other side of things, Ghalemdi Hydro Limited (GHL) lost the highest 6.30%.

5 of 13 sector indices closed red, "Trading" lost the highest 0.85% while "Others" gained the highest 2.05%.

Price Action, Technical Analysis

Previously, the RSI seemed to be rising at a time when the index was falling. This led some chart analysts to anticipate that a reversal might be ensuing.

But the index kept losing thereafter, and the RSI decline eventually followed, hence invalidating that hypothesis.

Nonetheless, a dragonfly Doji candlestick pattern has formed on the daily candlestick chart in NEPSE today. A dragonfly Doji is where the price (or index) opens at a point, makes a high very near the open, then drops sharply but closes back near the open nonetheless. This signals that although the bears were pessimistic and went on panic selling, the supply was eventually absorbed.

However, it isn't always certain that the supply-absorbers are strong enough to cause a reversal. This is why it is important to wait for a confirmation candle on the day after (Coming Sunday). A green candle indicating the entry of optimistic bulls on the next day is a great validator.

The volume today was the highest seen in the last 7 trading sessions. The RSI is below 30, indicating oversold conditions and the MACD line is negative.

On top of it all, the index seems to have faced support at the previous significant pivot low and bounced back from there. This may be an indication that the support at that level is strong, and the price may fail to break below it. Nonetheless, further index movement is integral to deducing a conclusion of any sort.