Nepse Index

Today the NEPSE index experienced a significant drop and closed at 2582.73, down by 58.05 points (-2.20%). The market is currently bearing selling pressure. With the price trading below key moving averages and indicators are signaling oversold conditions. Here’s a breakdown of the current market scenario and what traders should watch for:

Market Highlights

  • Current Price: 2582.73
  • Day’s Range: High of 2652.87 and Low of 2581.40
  • Volume: Trading volume remains low, reflecting weak momentum.
  • Trend: The price is below the EMA (9) at 2651.31 and SMA (20) at 2698.60, confirming a bearish trend.

Technical Indicators

  1. RSI (14): At 30.50, the Relative Strength Index is near the oversold zone, indicating the potential for a reversal if buying interest increases.
  2. CCI (20): The Commodity Channel Index is at -143.21, deep in the oversold territory, which often precedes a bounce.
  3. MFI (14): The Money Flow Index is at an extremely low level of 8.37, suggesting heavy selling pressure but also a possible reversal if buyers step in.
  4. Bollinger Bands: The price is near the lower Bollinger Band, which often acts as a dynamic support level, hinting at a potential bounce.

Key Levels to Watch

  • Support Levels:
    • Immediate support lies at 2550, a critical level for a potential bounce.
    • If this level is breached, the next support is at 2450.
  • Resistance Levels:
    • The first resistance is at 2650-2700, where the EMA (9) and SMA (20) converge.
    • A break above this zone could signal a trend reversal.

Trading Strategy

For Buyers:

  • Entry Point: Look for a reversal signal (e.g., a bullish candlestick pattern) near the 2550-2580 support zone before entering a buy position.
  • Stop Loss: Place a stop loss below 2530 to manage risk.
  • Target Levels:
    • First target: 2650 (EMA 9 and SMA 20 resistance zone).
    • Second target: 2700-2750 (next resistance level).

Confirmation of a Bounce:

  • Watch for indicators like:
    • RSI moving above 35.
    • CCI crossing above -100.
    • Increased trading volume.
    • A bullish candlestick pattern (e.g., hammer or engulfing) near the support zone.

Avoid Buying If:

  • The price breaks below 2550 with strong bearish momentum.
  • Indicators like RSI and CCI continue to decline without showing signs of reversal.

Conclusion

The NEPSE index is currently in a bearish phase, but oversold indicators such as RSI, CCI, and MFI suggest the possibility of a short-term bounce. Traders should closely monitor the 2550-2580 support zone for signs of a reversal before taking a buy position. However, caution is advised, as a break below this level could lead to further downside. Proper risk management, including stop losses and position sizing, is essential in navigating the current market conditions.

RELATED ARTICLESMORE FROM AUTHOR