How to Analyze NEPSE Charts: A Beginner’s Guide to Technical Analysis

Introduction: Why Chart Analysis Matters

In Nepal’s stock market, understanding price charts can be the difference between winning and losing trades.

Fundamental analysis tells you what to buy.
Technical analysis tells you when to buy or sell.

This guide explains how to analyze NEPSE stock charts using basic indicators like:

• RSI (Relative Strength Index)

• MACD (Moving Average Convergence Divergence)

• Volume

• Moving Averages (MA)

• Candlestick Patterns

Perfect for beginners trying to trade or invest smarter.

1. What Is Technical Analysis?

Technical analysis is the study of price movement and trading volume using charts and indicators to predict future price behavior.

Unlike fundamental analysis (which looks at earnings, dividends, etc.), technical analysis is:

• Data-driven

• Short to medium-term focused

• Based on patterns, momentum, and psychology

2. Understanding NEPSE Charts

NEPSE charts show stock price data like:

• Open: The price at which trading began

• High/Low: The maximum and minimum price in a session

• Close: Final traded price

• Volume: Total shares traded

🛠 Tools to View NEPSE Charts:

• NEPSE Official Site

• TradingView (NEPSE plugin)

• ShareSansar Technicals

• MeroLagani Chart View

3. Candlestick Basics: Reading Price Movement

NEPSE traders use candlestick charts instead of line charts for better detail.

🕯 Common Candlestick Patterns

4. RSI – Relative Strength Index

🔍 What it shows:

RSI measures how overbought or oversold a stock is on a scale from 0–100.

• RSI > 70: Overbought → Price may fall

• RSI < 30: Oversold → Price may rise

✅ When to Use:

Look for reversals when RSI touches extremes.

📊 Example:

If CHCL has RSI = 82, it might be time to book profits.

5. MACD – Moving Average Convergence Divergence

🔍 What it shows:

MACD tracks trend direction and momentum using two moving averages.

• MACD Line = Fast MA – Slow MA

• Signal Line = 9-day EMA of MACD

• Histogram = Difference between MACD and Signal

✅ When to Use:

• Buy signal: MACD crosses above Signal

• Sell signal: MACD crosses below Signal

📊 Example:

When Nabil Bank’s MACD crosses above signal at 550, price may rally.

6. Volume – The Confirmation Tool

🔍 What it shows:

Volume = number of shares traded.

✅ When to Use:

• Rising price + rising volume = strong move

• Falling price + low volume = weak move

📊 Example:

If NHPC breaks resistance with 3x volume, breakout is likely genuine.

7. Moving Averages (MA)

🔍 What it shows:

MAs smooth price trends over time. Popular MAs:

• 20-day MA: Short-term trend

• 50-day MA: Mid-term

• 200-day MA: Long-term trend

✅ When to Use:

• Golden Cross: 50 MA crosses above 200 → Bullish

• Death Cross: 50 MA crosses below 200 → Bearish

📊 Example:

NRIC crossing above its 50-day MA could signal trend reversal.

8. Support and Resistance Levels

🔍 What it shows:

• Support: A level where the stock stops falling and bounces up

• Resistance: A level where the stock stops rising and reverses

✅ When to Use:

• Buy near support, sell near resistance

• Breakout above resistance → potential rally

📊 Example:

If UPCL breaks Rs. 320 resistance with volume, it could rise further.

9. Common Mistakes Beginners Make

• Blindly trusting one indicator

• Overtrading every signal

• Ignoring volume confirmation

• Not setting stop-loss

• Using global patterns without local context (NEPSE behaves differently)

10. Final Checklist for Chart Analysis (NEPSE)

✅ Check the trend (up/down/sideways)
✅ Use RSI for overbought/oversold
✅ Watch MACD crossovers
✅ Confirm with volume
✅ Draw support/resistance lines
✅ Align decisions with market sentiment (news, NRB policies)

Conclusion: Practice Makes Profit

Technical analysis isn’t magic. It's a toolset to help you make smarter trading decisions. With practice and patience, you’ll learn to trust the patterns and signals you see.

Even in a developing market like NEPSE, charts don’t lie — they just need the right eyes.