What is Technical Analysis?
Technical analysis is a trading discipline that evaluates securities by analyzing statistics generated from market activity, such as past prices and volume. It uses charts and indicators to identify patterns that can suggest future activity.
Key Technical Indicators for NEPSE
1. Relative Strength Index (RSI)
RSI measures momentum on a scale of 0-100. Currently on NEPSE, the average RSI across all stocks is 61.7. Banking sector leads with an average RSI of 70.5, while Hydropower stocks average 59.3. Stocks with RSI above 70 are considered overbought, while below 30 is oversold. Currently only SAMAJ (RSI: 16.9) is in deeply oversold territory.
2. Moving Averages (SMA & EMA)
Moving averages smooth out price data to identify trends. The two most important signals are: Golden Cross (50-day MA crosses above 200-day MA, bullish) and Death Cross (opposite, bearish). Currently 15 stocks on NEPSE show golden cross signals, led by LEC, RBCL, BHL, and GLH in the hydropower sector.
3. MACD (Moving Average Convergence Divergence)
MACD shows the relationship between two moving averages. A bullish crossover occurs when the MACD line crosses above the signal line. Stocks like NBLD85 and AKJCL currently show bullish MACD crossovers, indicating potential upward momentum.
Sector-wise Technical Snapshot (March 2026)
Banking leads all sectors with an average composite score of 70.1, followed by Mutual Funds at 69.5, and Finance at 68.1. The Hydropower sector, despite having the most stocks (93), averages 62.4. Manufacturing shows strong individual performers like SHIVM (score: 79.9) and SONA (74.9).
Volume Analysis Basics
Volume confirms price movements. High volume on price increases suggests strong buying interest. Currently, 15 NEPSE stocks show volume ratios above 2x their 20-day average, with C30MF leading at 12.7x normal volume and NBLD85 at 9.7x.
How to Get Started
Start with these steps: (1) Learn to read candlestick charts, (2) Master RSI and MACD indicators, (3) Understand support and resistance levels, (4) Use volume to confirm your analysis, and (5) Always use stop losses for risk management.