1100Mail.

235RD EDITION Mar 20, 2021

Welcome to the latest

edition of MeroLagani
Newsletter brought to
you by MeroLagani
Technical Analyst
Team.
THIS WEEK’S STORY: STORY UNCHANGED –
CONTINUATION OF CORRECTION OR RANGED MARKET
AHEAD – BULLISH MARKET ONLY IF STABLE ABOVE 2520
Author: MeroLagani Technical Analyst Team

For Subscription: NEPSE as of Mar 18, 2021

To subscribe MeroLagani Weekly Candlestick Chart

Technical Newsletter, visit:

https://merolagani.com
/newsletter.aspx

Fig 1

R2: 2625 | R1: 2560 | Last Trading: 2475.09 | S1: 2360 | S2: 2300

Page 1 of 31
Weekly chart of NEPSE: The weekly chart has indicated that, this week, it has formed a Dragonfly Doji candle
pattern. It signifies that sellers were rejected this week and next week's candle will more likely to confirm
further direction of the market. The immediate support lies at 2365 – 2390 zone and major support zone
lies at 2100 and 1900 zone.

Daily Candlesticks

Fig. 2

This week market closed at 2475.09, which is 16.60 points higher or 0.68% higher than last week.

Trend analysis:
The daily time frame indicates that this week, market found support at 2369 and most likely to retest 2535
resistance zone once again.

Exponential Moving Average (EMA): As the 20 and 50 day EMA are still converging, indicating that buying
momentum still not strong enough.

Relative Strength Index (RSI): RSI is at 51.33 level. The RSI oscillator is signifying buyers overcoming sellers.

Candlestick: Blending week's candlesticks has formed a Dragonfly Doji pattern, indicating demand might
increase but further confirmation needed.

RECOMMENDATIONS:

Considering, the above NEPSE trends and indicators, market is in positive tone at present and targeting 2535
zone as next immediate resistance. If it makes a valid break above, it will more likely to favor further positive

Page 2 of 31
tone of the market and it may again retest the record high of 2676 once again. Similarly, failing to stable
above 2535 will signal sellers overcoming buyers and market might fall back to 2365-2390 support zone.

So What To Do Next?

The Extreme Greed level had already been triggered with its reading as high as 100 and now retracing
back to the 80s. Right now, the Fear & Greed meter reading currently at the index of 2475.09 is 80.36.

It has been mentioned multiple times that since the Fear and Greed Meter was moving towards 100, a
real good strategy was mentioned in multiple previous newsletters to be either to HOLD or SELL at
stronger resistances as market pumps further up. Now as the market retraces back to the Neutral – Greed
zone, this Neutral to Greed zone might be a perfect time to start accumulating your favorite stocks.

Page 3 of 31
HOW CAN WE ANTICIPATE THE METER TO WORK DURING A BULLISH MARKET?

As mentioned multiple times in the past, based on the Fear & Greed meter, slow accumulation zone was
already triggered when the market was at the Extreme Fear to Fear level. This level of Fear was when the
market neared the index of 1150s. Right now, the market has already touched the Extreme Greed Level,
and is slowly retracing back to the Greed level from the Extreme Greed. What we can anticipate during
a Bullish market momentum would be the meter moving between the Extreme Greed and Greed level,
i.e. as soon as market starts hitting Neutral to Greed level, market would have a high possibility of
bouncing back.

It has been mentioned multiple times in the newsletters previously and also time and again proven that
once market hits Extreme Geed levels, it has always been perfect time for profit booking. However, since
bullish momentum is currently triggered, we can anticipate this meter to work between Greed to Extreme
Greed Level, with Neutral to Greed Level as a BUY position and Extreme Greed as a SELL. For now, the
strategy we need to execute can be as below:

WHEN TO HOLD?

- A strong HOLD strategy for the coming week would be if NEPSE at least remains above 2460 this
coming week. This level above 2460 ensures that market would go ranged between 2460 - 2560,
with 2460 acting as a strong immediate support level. Hence, we would recommend a strong
HOLD position if NEPSE stabilizes above 2460 in this coming week, as a maximization of the profits
and trailing stop loss approach.

WHEN TO SELL?

At the current market scenario, SELL can be initiated at two points henceforth:

- TRAILING PROFIT SELL strategy: The first set of stop loss trailing was initiated when market was
unable to maintain above the index of 2620. Next set of stop loss was executed at the point of
2520, when market was unable to maintain above 2520. A third set of stop loss would be triggered
if market is unable to maintain above 2460, hence a next set of sell if market is unable to maintain
above 2460.

- SELL AT RESISTANCE: Currently, the index seems to have a strong resistance at the 2500 – 2560
Index. Sell at Resistance would mean selling as market hits the resistance. Currently, some
portion of the stock can be sold at the Index’s current resistance of 2560, but sell at resistance
strategy would also need a confirmation signal at least such as candlestick reversal, etc.

Page 4 of 31
WHEN TO BUY?

The 218th Edition newsletter focused on “A proper breakout BUY call would be only at a proper
retracement or at a proper further breakout which would be the index of 1800. Till then, a proper
maximization strategy can be initiated”. We would recommend at this stage to keep a HOLD or a trailing
stop loss approach of the position for now instead of going for any fresh BUY.

So what are we looking for as a sign of bullishness?

The conclusion derived in the past two newsletters has slightly changed in that:

- It was mentioned in the past newsletter that, “Maintaining above the index of 2050 with high
volume and still maintaining the upward momentum can be taken as a preliminary sign of
bullishness with closing above 2100 as a strong sign of bullishness”. We are currently witnessing
this bullishness momentum with now T2 target as high as 2520 already met. A valid new breakout
point at this point would be maintaining above 2630, which would again take the index to as high
as 2760. For past week, this was not the case as market started to fall below 2590, creating a valid
sell signal.
- A sign of bearishness, however, would be market unable to maintain the index of 2620 and falling
below 2590, which would trigger a set of strong SELL. Last few weeks’ data created a valid sell
signal.
- Anything amid 2360 and 2560 actually could trigger a short set of ranged market, which at this
point could be the most likely scenario at the moment.

A lot of good buys were recommended continually when NEPSE was in the process of bottoming out and
as market entered Extreme Fear level months before.

(NOTE: The chart shown below is “highly subjective analysis” wherein via Merolagani Data Analytics
Ghost Feeds, the presenter is trying to sketch possible layout of NEPSE via Elliott Wave, Resistances
and Supports, and Fibo Retracements.)

It was mentioned on July 2020 newsletter that “if market successfully bounces back and starts moving above
1290 as the early sign of reversal and if above 1360 within two weeks timeframe, Elliott Wave Theory would
suggest a start of Intermediate Degree Wave 3 in the process, which would have the potential to even break
the 1881 Index.”

Page 5 of 31
a

It was mentioned in the 207th Edition newsletter that:

“The possibility of market giving an opportunity to sell at the index of 1560s has become very high, which
could complete the start of the first wave as per Elliott Wave, however, if market is unable to and starts
falling off the cliff of 1350s, as mentioned multiple times in the newsletter, we would need to conclude market
to continue to be bearish, with the current pattern as ABC, with the bottom in NEPSE yet to be formed.”

Page 6 of 31
It was mentioned in previous newsletter that, “The last weeks’ newsletter mentioned about the Wave 4,
which means upon completion of Wave 4, we will be witnessing a Wave 5, which would be able to lead NEPSE
to as high as 2250 as T1 and 2450 as T2. A mere closing above 1975 at this point would trigger an early sign
of bullishness with a confirmation above 2050 at this moment”.

Page 7 of 31
It was mentioned in last newsletter that “Right now, based on Elliott Wave, we are either moving towards
the third wave or the fifth wave, with two possible targets in the near future as either 2350 or 2500.” This
analysis is unchanged since last newsletter with a slight change that we are still on the 3 rd wave, and that
the 4th wave is overdue.

Page 8 of 31
Page 9 of 31
It was mentioned in the previous newsletter that “Based on Elliott Wave, as we had mentioned multiple
times in the past, a corrective rally of the fourth wave was due, which the market is currently retracing for.
A standard correction in the market could be till the index of 2360 – 2400, however, possibility of a more
deeper correction to market going as low as 2225 – 2350 also cannot be excluded, with the fifth wave
possibility either as a truncated fifth to as high as 2800 – 2900 as the ultimate target, which have been
mentioned multiple times in the past newsletters as well.”

Based on the current pattern, if market is unable to maintain above 2440 this coming week, this could
potentially trigger a heavier correction pattern, however, the probability of the end of correction would be
high if market is stable above 2475.

Page 10 of 31
 SECTORAL ANALYSIS
_____________________________________________________________________

BANKING SUBINDEX

Banking sector found support at 1704 and pulling back for a retest of 1830 resistance zone.
If it stables above this level next week than banking sector will most likely to be in positive
tone for some time. Similarly, market stable below 1700 will more likely to favor negative
territory further.

R2: 1920 | R1: 1830 | Last Trading: 1762 | S1: 1700 | S2: 1662

Page 11 of 31
DEVELOPMENT BANKING SUBINDEX

Development Banking sector also found a support at 2465 and now targeting to retest 2610
resistance zone once again.

If it stables above 2610, it will indicate that market will more likely to favor positive tone of
the market and faces immediate major resistance level of 2790. But if it stables below 2610
than this sector will more likely to favor negative zone once more with support zone at 2465.

R2: 2735 | R1: 2610 | Last Trading: 2532 | S1: 2465 | S2: 2423

Page 12 of 31
FINANCE SUBINDEX

Finance sector found a support at 1110 this week and retesting 1157 resistance zone once
again. If it manages to stay stable above 1157, than more likely this sector will favor positive
territory of the market once again and face the 1221 level as a resistance.

Similarly, if market stables below 1100 than it will more likely correct further more.

R2: 1221 | R1: 1157 | Last Trading: 1147 | S1: 1134 | S2: 1100

Page 13 of 31
NONLIFE INSURANCE SUBINDEX

For the past few weeks, Non-Life sector is moving in a downwards channel formation.
According to pattern if it breaks the above trendline, it will more likely to favor positive
territory with next resistance level at 13000. But similarly, market stable below 11650 will
more likely to favor negative territory.

R2: 13000 | R1: 12600 | Last Trading: 12230 | S1: 12000 | S2: 11675

Page 14 of 31
LIFE INSURANCE SUBINDEX

Life Insurance has broken the intermediate downtrend trendline which is positive signal for
the market. Now, this sector lies at 17110 resistance zone, if it makes a valid break above
this zone, then most likely market will favor uptrend with next immediate target of 18000
resistance zone. But failing to break 17110 will also mean it will more likely to favor negative
territory once again with 15540 as a support zone.

R2: 18000 | R1: 17110 | Last Trading: 16740 | S1: 16000 | S2: 15540

Page 15 of 31
MICROFINANCE SUBINDEX

Similar as other sectors, Micro Finance found a support at 4060 and now retesting the 4362
resistance zone. If this sector able to stay above 4362 level, it will more likely to favor positive
territory once again with next immediate resistance level at 4800. But market stable below
4060 level will more likely to favor negative tone with next immediate support at 4000.

R2: 4800 | R1: 4362 | Last Trading: 4329 | S1: 4200 | S2: 4060

Page 16 of 31
HOTEL SUBINDEX

This sector looks positive in an uptrend, making sharp uptrend. As said in previous post, one
should not forget that Chandra Giri Hills Limited is included in this sector from couple of
weeks ago and major move in this sector is the main reason of the price rise in this company.
Therefore, at the time being its better watch and wait until market settles down.

R2: 3150 | R1: 3000 | Last Trading: 2868 | S1: 2600 | S2: 2240

Page 17 of 31
HYDROPOWER SUBINDEX

This sector is making a bounce back from the major psychological zone of 1900, where EMA
35 have a confluence as well. This sector at present is testing a major resistance level of 2150
and 2200 zone. Valid breakout above this zone will signal that Hydro sector will favor positive
territory with an uptrend for some time. Similarly, market stable below 2065 level will more
likely to retrace to support of 1900 zone.

R2: 2350 | R1: 2150 - 2200 | Last Trading: 2109 | S1: 2065 | S2: 1900

Page 18 of 31
 SO WHAT TO WATCH NEXT – THE BUY LIST
_____________________________________________________________________

Market has successfully bounced back from the Greed level and is now back to the Extreme Greed. This
means there will still be probability of market going as high as Extreme Greed of 100 as happened
multiple times in the past.

The overall position if market shows positive tone could be either HOLD or BUY this coming week.

Hence, for now, the ultimate strategy would be:

1. Is the market stable at the index of above 2460? If yes, this is HOLD, and a stability above 2460
would mean NEPSE refusing to fall and a quick move to as high as 2550 as T1.
2. Is the market falling off 2440 this coming week – if yes, just go with the confirmation signal of
reversal and SELL strategy with any breakout below 2440 with volume as a valid confirmation
of SELL signal.
3. Is the market maintaining above the index of 2460 this coming week with volume – if yes, this
could be a good buying signal and as a turn of event, hence giving an assumption that buyers are
extremely strong and so new target set as high as 2680 as T1 and 2800 – 2900 as T2. However,
any buy at index above 2460 would need a stricter stop loss at 2430.

Page 19 of 31
TOP BUY LISTS
At the closing of the last week, the whole story unfolded for just a retracement or bounce back of the
250+ point fall. It is very crucial to watch the market this coming week. Any higher targets would need
strong dominating buyers above the index of 2460, wherein if there are heavy sellers, then there would
be a high probability of market retracing back to the 2350s.

1. Nabil Bank Ltd. (NABIL)

Nabil Bank Ltd (NABIL) is seemingly out of the downtrending line, and hence again moving to face
forward the T1 and T2 levels of resistance, if market price of NABIL becomes stable this coming week
at above Rs. 1250.

Page 20 of 31
FUNDAMENTAL ANALYSIS:

Nabil Bank Ltd. has a paid-up capital of 13.4 Arba, and has a current Net Profit till Q2 of Rs. 2.01 Arba.

NABIL bank has EPS of Rs. 29.91, and net worth of 214.08.

Fundamental Analysis Summary: NABIL price tag is not supported by the published fundamentals of
the company, hence this setup is to be used with strict stop loss in mind.

Page 21 of 31
 The Data Analytics review on the Stock Popularity Tool for NABIL shows AVERAGE sentiments
with good volume traded last trading day of 91022 stocks at an average price of Rs. 1235.37.

Looking at the Floorsheet Analysis as well, if the price of this stock continues to stay above Rs.
1250, there will be a high likely probability of the stock price of NABIL reaching its T1 and T2
targets.

Current Market Price Buy At Stop Loss Targets View

1243 > 1260 Below 1230 1325, 1435 Breakout buy above Rs. 1250

Page 22 of 31
RISK TO REWARD ANALYSIS:

Current Market Price: Rs. 1243

Buy at: Rs. 1260
Stop Loss SL1: Below Rs. 1230

Risk for SL1: Rs. 30

T1 Target: Rs. 1325

Reward for T1: Rs. 65

Risk To Reward Ratio (SL1 : T1) is approx. 1:2 which is an average trade setup

Please do your own diligence before taking position.

Disclosure: The author of this recommendation does not own stock of NABIL.

Page 23 of 31
 2. Deprosc Laghubitta Bittiya Sanstha Ltd. (DDBL)

Deprosc Laghubitta Bittiya Sanstha Ltd (DDBL) is seemingly out of the downtrending line, and hence
again moving to face forward the T1 and T2 levels of resistance, if market price of DDBL becomes stable
this coming week at above Rs. 1915.

Page 24 of 31
FUNDAMENTAL ANALYSIS:

Deprosc Laghubitta Bittiya Sanstha Ltd. has a paid-up capital of 1 Arba, and has a current Net Profit till
Q2 of Rs. 32 Crore.

DDBL has EPS of Rs. 64.45, and net worth of 219.66.

Fundamental Analysis Summary: DDBL price tag is not supported by the published fundamentals of
the company, hence this setup is to be used with strict stop loss in mind.

Page 25 of 31
 The Data Analytics review on the Stock Popularity Tool for DDBL shows AVERAGE sentiments
with good volume traded last trading day of 20544 stocks at an average price of Rs. 1901.

Looking at the Floorsheet Analysis as well, if the price of this stock continues to stay above Rs.
1915, there will be a high likely probability of the stock price of DDBL reaching its T1 and T2
targets.

Current Market Price Buy At Stop Loss Targets View

1914 > 1915 Below 1890 2015, 2120 Breakout buy above Rs. 1915 only
if supported by volume

RISK TO REWARD ANALYSIS:

Current Market Price: Rs. 1914

Buy at: Rs. 1920

Page 26 of 31
Stop Loss SL1: Below Rs. 1890

Risk for SL1: Rs. 30

T1 Target: Rs. 2015

Reward for T1: Rs. 95

Risk To Reward Ratio (SL1 : T1) is approx. 1:3 which is an average trade setup

Please do your own diligence before taking position.

Disclosure: The author of this recommendation does not own stock of DDBL.

Page 27 of 31
TOP SELL LIST

1. United IDI Mardi RB Hydropower Ltd. (UMRH)

A bull trap is being formed in the stock of UMRH wherein if we closely watch out the buying and selling
sheet, we can easily determine that this stock is being pumped to dump.

Figure 1 UMRH price action analysis

After consecutive three day rally, a heavy selling pressure might be seen in the stock of UMRH, wherein
sellers could be extremely heavy above the range of Rs. 295 - 300.

Page 28 of 31
An average rate over the past week of UMRH is approx. 269, with no heavy buyers or concentrated buying,
meaning this stock is purely bought from the pumping perspective wherein Broker #56 has already dumped
a chunk at the 10% High price of Avg Rs. 280.

EDITOR’S RECOMMENDATION ON UHRM: Sell at immediate resistance of Rs. 295 - 300.

Page 29 of 31
Current Market Price Sell At Targets View
286 295 - 300 255 Sell at Resistance

Disclosure: The author of this recommendation does not own stock of UMRH.

Please do your own diligence before taking position.

Disclaimer: Merolagani is not a licensed investment advisor. The analysis provided is based on the
experience of the Technical Analysis team. This newsletter is designed to be used as a tutorial or
educational purpose only. This information is of a general nature only, so you should seek advice from
your investment advisor or others as appropriate before taking any action, The author and publisher
expressly disclaim representation of opinion of merolagani.com, thus the information as in should
only be used by investor who are aware of risk in securities trading. Furthermore, Merolagani or the
Technical Analyst Team does not accept any liability whatsoever for any loss arising in the securities
trading from the use of this content.

Page 30 of 31
 Though every effort was made to make this volume error-free, if you find
errors, mistakes and typos, please let us know at support@asteriskt.com

Contact us
Orchid Hotel Building-4th Floor
Tripureshwor, Kathmandu, Nepal
Tel :( +977) 01-4215101/4215184, Mobile: 9801000860
Email: support@asteriskt.com

Page 31 of 31