Reevaluating the Purchasing Capacity in NEPSE: Analyzing the Present Market Situation from a Technical Perspective

Reassessing the Buying Potential in NEPSE: Exploring the Current Market Conditions technically

Disclaimer: The article is for Educational purposes only

In the recent market landscape, investors have exhibited a positive bias and remained optimistic about the breakthrough of the 2200 level. However, the market has experienced successive selloffs upon reaching this level for the third time. Despite this repeated occurrence, the current technical scenario distinguishes itself from the previous instances, suggesting potential changes in market dynamics and warranting a closer examination of the situation. Let's delve into the latest analysis to gain deeper insights into the evolving market conditions.

The NEPSE INDEX has exhibited significant positive developments, demonstrating a robust upward trend channel in the medium to long term. This trend shift was initiated when the index successfully breached a formidable resistance level at 1960, which has now transformed into a strong support level. This breakout indicates growing investor optimism and suggests a continued upward trajectory.

The ongoing decline in the index can be interpreted as a corrective pullback following a prior upward move of a lower degree. Additionally, the positive volume balance highlights that trading volume has been higher on days when prices are rising, indicating increased interest in buying and a reluctance to sell during price declines.

A crucial milestone to watch for is the breaking of the previous month's high at 2206, as it would serve as an indication of further upside potential. In the event of a negative market reaction, the index is expected to find support around the 1980-1950 point range. It is worth noting that the market remains within a rectangular box pattern, but the overall technical assessment of the index leans towards a positive outlook in the medium to long term.

Furthermore, the current price level is above a previously established support level, where the stock has historically rebounded. This may present an opportunity for investors to perceive the market as undervalued if it approaches the support level once again, potentially leading to increased buying interest.

In conclusion, considering the aforementioned technical factors, the current market conditions suggest that the NEPSE INDEX is in a buying zone. Investors should monitor the breakout of the previous month's high and the behavior around the support level for potential trading decisions.

Additional Optimism through Market Breadth: Furthermore, when examining a widely recognized market breadth indicator employed by technical analysts, namely the Net High Low, a noteworthy observation emerges. The panic level has experienced a substantial decrease since June of last year, during which the market encountered the approximately 1800 level on three to four occasions. Such recurring patterns compel any discerning technical analyst to consider the market's proximity to a potential long-term bullish reversal.