Technical analysis of Nepal Stock Exchange (Nepse) index for the week from Dec 21, 2014 to Dec 24, 2014. The technical analysis includes summary, RSI, MACD and Bollinger band analysis. The analysis is done by Kriti Capital & Investments Ltd.

1. Technical Analysis
1. Market Summary (as of Dec 26, 2014)
Nepse at close last week (Dec 24, 2014) 887.80
Nepse high last week (Dec 21, 2014) 896.61
Weekly Change -16.09 (or -1.78%)
Daily Volume (Avg.) NPR 15.59 crores
Total Traded Amount (weekly) NPR 62.36 crores
Immediate Resistance 916.74
Immediate Support 875.56
RSI 52.17
MACD Line 3.15
Signal Line 0.58
2. Market Trend
Nepse (Jan 01, 2014 – Dec 24, 2014)
There was decreased investor enthusiasm in the review period with average daily trading volume
falling by 32% from previous week. The 50-day Moving Average crossed below the 200-day Moving
Average, indicating a sell signal (Death Cross) on Sunday – Dec 21, 2014. The index dropped close to
immediate support level since then before rising on the final trading day of the week.
The immediate support level of 875.56 was tested with Nepse hovering near the 876 level on much
of Tuesday and Wednesday. The immediate support seemed strong enough with Nepse rising to level
of 887.80 at the close of trading on Wednesday - Dec 24, 2014.

2. After breaching the immediate resistance level of 875.56 the week before, Nepse witnessed more of
sideways movement in the past week.
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.
RSI fell from close to overbought region to neutral region in the past week. RSI ended the week at
52.17 level.
RSI (Jan 01, 2014 –Dec 24, 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.
In the review period, the Signal line rose rapidly to close its gap on MACD line. Meanwhile, the MACD
line decreased slightly. If the trend continues and the MACD line crosses below the Signal line in the
coming days, this would indicate a sell signal.
MACD (Jan 01, 2014 – Dec 24, 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.
The Bollinger bands diverged further in the review period, indicating increase in volatility in the
market. Nepse fell from close to the upper band to end near the mid band in the review period. This
indicates that the current price is neither too high nor too low, i.e. the market is neither overbought
nor oversold at the moment. Like the RSI, Bollinger bands too indicate that the Nepse is displaying
neutrality at the moment.

3. Bollinger Bands (Jan 01, 2014 – Dec 24, 2014)
Overview:
Nepse tested the immediate support level of 875.56 in the past week. As the support seemed strong
enough, there was short-term trend reversal with index increasing from the lows of 876 to end at
896.61. The Bollinger bands and RSI indicators suggest that the index is in the neutral region. This
means there is no strong buy or sell signal through these indicators.
But, as the Bollinger bands have indicated high volatility, we may see more of sideways movement in
Nepse with the support and resistance level tested in the coming days.

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Nepse (Jan 01, 2014 – December 24, 2014)

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RSI (Jan 01, 2013 – December24, 2014)
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MACD (Jan 01, 2013 – December 24, 2014)
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6. Bollinger Bands (Jan 01, 2013 – December 24, 2014)
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