NEPSE technical analysis: Inverted hammer with low volume, a market reversal near?

The NEPSE index showed volatile movement again today, eventually closing slightly lower. Notably, the trading volume was the lowest since mid-Asar, indicating a significant “volume dry-up” in technical terms. This change in volume behavior often signals a potential shift in market sentiment.

Inverted Hammer on Chart

Today’s candlestick pattern formed an “Inverted Hammer” — a signal that often appears at the bottom of a downtrend. Combined with low volume, this pattern suggests the market may be nearing a reversal point. A similar scenario played out during Asar 9–11, when the NEPSE reversed upward after multiple inverted-type candles appeared, each with daily trades around Rs. 6 billion.

If low volume continues in the coming sessions, it could indicate that selling pressure is diminishing — a common precursor to a bullish turnaround.

Bollinger bands, MACD & other indicators

• Bollinger Bands: The index has fallen below the middle band, though the gap between upper and lower bands remains wide — implying increased volatility ahead.
• MACD: A bearish crossover is present and currently valid.
• Histogram: Bars are negative and extending — another bearish sign.
• RSI (Relative Strength Index): Trading in the neutral zone.
• Money Flow Index (MFI): At 42, suggesting moderate money inflow and no clear direction yet.

Support and Resistance Levels

• Support Zones: If NEPSE falls further, strong support is expected around 2800 and 2770 levels.
• Resistance Levels: On the upside, the market will face resistance near 2842, 2882, and 2955.

While technical indicators show early signs of potential reversal, confirmation will depend on how the market behaves in the next few trading sessions. As always, investing in the share market involves risk, and this analysis is not a recommendation for trading decisions.