The NEPSE index gained for two days and lost for two days in the four trading days this week. The market was closed on Thursday on the occasion of Tamu Lhosar. The NEPSE index closed at 2,524.50 this week after a gain of 4.27 points (0.17%). The index had closed at 2,520.23 last week with a gain of 6.04% from the week before that.
This week, the index went as high as 2,615.47 and as low as 2,487.41, hence witnessing volatility of 128.06 points. In the previous week, the index had seen the volatility of 195.15 points.
Analysis of Trend
The NEPSE index is up more than 25% compared to the same date last year. However, it has lost more than 20% from the all-time high of 3,198.60 created around four months ago. Nonetheless, the index has bounced back around 11.6% after reaching the nearest intraday low of 2,259.63 on December 13 (most recent pivot low).
On the weekly candlestick chart, this week’s market movement has formed a small-body red candle with relatively longer wicks on both sides. Last week, the weekly chart had formed an extended green candle.
The first trading day (Sunday) this week formed a promising green candle, a gain of 2.82% on the index. However, the second candle formed on Monday opened higher but closed lower than the previous candle’s open with higher volume, hence forming a Bearish Engulfing candlestick pattern. The bullish sentiment then seemed to have fizzled out, as the next two days saw little progress and closed very near their respective opening level.
The index has closed only a tad bit higher than the 20-day Exponential Moving Average and the 5-day EMA.
Furthermore, the 5-day EMA went above the 20-day EMA for the first time this week, and the crossover is intact as of the last trading day. The 5 days EMA had previously crossed below the 20 Days EMA on November 25.
The 200-day simple moving average (SMA) is also considered a key indicator by traders and market analysts for determining overall long-term market trends. The price went below the 200-day SMA on November 23. When a stock price moves below the 200-day moving average, it’s considered a bearish signal indicating a downward trend in the stock. The index is still a long way below the 200-day SMA.
The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or index. Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.
The RSI reading on the daily timeframe is 49.17. The RSI reading breaking above 50 would indicate intermediate-term upwards. Meanwhile, the RSI reading on the weekly chart is 43.12.
On the other side of things, both the MACD line
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