Technical Analysis 1. Market Summary (as of Oct 31, 2014)

Nepse at close last week (Oct 30, 2014) 930.21

Nepse high last week (Oct 27, 2014) 935.01

Weekly Change 1.22 (or 0.13 %)

Daily Volume (Avg.) NPR 25.00 crores

Total Traded Amount (weekly) NPR 1 billion

Immediate Resistance 972.17

Immediate Support 917.58

RSI 51.07

MACD Line -0.95

Signal Line -4.47

2. Market Trend

Nepse (Jan 01, 2014 – Oct 31, 2014)

The secondary market inched up the first two trading days, which was then followed by a minor decline during the remaining two trading days. As a result, Nepse remained almost flat by the end of the week but managed to increase by 1.22 points (or 0.13%) to close at 930.21 points. The market has been positive during the last 3 trading weeks, however, the gains have been minimal during each of those weeks. Market volume witnessed a minor increase from NPR 23.51 last week to NPR 25.00 crores this week. The market is currently maintaining within the resistance and support levels of 972.17 and 917.58 respectively. The Nepse line is very close to breaching above the 50-day moving average, which is indicative of an upward trend. However, this needs to be supported by volume for the market to gather momentum in the upward direction.

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. The RSI hovered within a tight range but managed to increase slightly this week to 51.07 levels. Similar to the previous week, the RSI is almost at the center of the neutral zone suggesting that the market is neither highly overbought nor oversold.

SI (Dec 01, 2013 – Oct 31, 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. The MACD and Signal lines have both been gradually moving upwards indicating that the momentum has been in the positive direction in recent times. At present, the MACD and Signal lines stand at – 0.95 and – 4.47 points respectively. If the MACD line crosses above the zero line, this would indicate a buy signal.

MACD (Dec 01, 2013 – Oct 31, 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. Currently, the Nepse line has been hovering slightly above the mid-band and maintaining within that level. The upper and lower bands have also been trending sideways due to low volatility in the market. This is indicative of a very neutral market.

Bollinger Bands (Dec 01, 2013 – Oct 31, 2014)

Overview: Similar to that of the previous week, Nepse once again hovered in the sideways direction. By the last day of the trading week, the stock market added 1.22 points, an increase of 0.13%, to close at 930.21 points. The market has been following a sideways trend in recent weeks, which has helped the market stabilize in the near term. However, Nepse is moving towards the 50-day moving average. If it crosses above this moving average, it would indicate a buy signal. The average daily volume saw a minor increase to NPR 25.00 crores from NPR 23.51 crores the week before. The RSI inched up slightly this week to 51.07 levels indicating that the market has been very neutral in recent times. The MACD line is moving closer to the zero line, which upon crossing above would indicate a buy signal. The Bollinger Bands show low volatility in the market. Overall, the market may buck a sideways trend unless there is a significant change in market volume.

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Nepse (Jan 01, 2014 – October 30, 2014)

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RSI (Jan 01, 2013 – October 30, 2014)

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MACD (Jan 01, 2013 – October 30, 2014)

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Bollinger Bands (Jan 01, 2013 – October 30, 2014)

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