Weekly Technical Analysis of NEPSE index; Bullish trend is excelling; time to buy stocks

Week's Index movement:  On the first trading day the index lost 12.44 points, on the second day it lost points, on the third-day index changed its direction and gained 6.77 points, on the fourth-day index gained 13.31 points. On fifth day index continued its upward movement thus gained 14.13 points. Market sentiment is looking very positive this week.

Technical Analysis

Candlestick Pattern: A type of bullish marubozu was observed on a daily candlestick and on a weekly candlestick, no special pattern was observed. The long-bodied bullish candle had formed in both the time frames which displays the positive sentiment of the investors.

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

(NEPSE index candlestick chart with EMA's and Volume chart taken from the SS Pro)

5 days EMA is above the 20 days EMA which supports the uptrend. The NEPSE is trading above both 5 days and 20 days EMA which shows the short-term trend is upward. Still 180 days EMA is above the NEPSE index value and currently, it lies around 1305 points.

Volume: Volume chart is shown above with EMA's. The best thing for this week's index uptrend is that the volume increased and correspondingly the index "gain" had increased. This kind of movements provides the strong foundation for the uptrend.

Bollinger Bands: The index is in the upper band of Bollinger band is below the NEPSE index value which means index value is high and indicates the possibility of bearish retracement.

                 (Bollinger Band and RSI; taken from the SS Pro software)

Relative Strength Index (RSI): RSI is shown above in the chart. RSI is very close to the over-bought position of 70 and divergent is not observed. Currently, the RSI is at 67 level.

MACD:   MACD chart is shown below. MACD is positive (+10) and a signal line (red line) is below the MACD line (blue) that means buyers could dominate the game next week.

 (Picture was taken from the SS Pro)

 Fibonacci Retracement:  Picture for the Fibonacci retracement is shown below.

(Picture was taken from the SS Pro)

We have taken high of 22nd April 2018 as the highest point of 1461 and Low of 13th August 2018 as the lowest point of 1161, from April to August index had lost 300 points.  As we can see from the picture above the index had broken the resistance level of 23.6% (1234) now next strong resistance of 38.2% which lies at 1277 points. The market doesn’t have a strong resistance before 1277 points.

Sharesansar's SS Pro has introduced a unique feature of market confidence meter by considering various aspects of the market.

Current market confidence is 47.20 which lies in the neutral zone of 41-60. Confidence level has increased compared to last week's level. An increment in confidence level supports uptrend.

Support and Resistance: The support for the index is at 1210 points and the index has entered the range of 1244-1285 points. The hurdle for the upward movement is at 1275-1285 points. If it broke that level then we will enter into the mid-term bullish trend. NEPSE could retrace up to 1230 points.

Support and resistance level according to Pivot Point

Pivot Point: 1232

1st Resistance: 1258                           1st Support:  1217.76

2nd Resistance: 1271                           2nd Support: 1192.64

Prediction: We could see the uptrend and volatility could decrease.

This week NEPSE's statistics:

NEPSE index open: 1229.77 points                      Index Closed: 1244.84 points

Index high: 1246.24 points                                    Index low: 1206.88 points

Total turnover: Rs. 2.10 arba

Total transaction: 23611

Total traded shares: 1.02 crore.

Turnover has decreased by 27.17% comparing to last week's turnover.