Strong Recovery in the Nigerian Stock Market - Tales of Barganing Interest

Trend Analysis

The NSEASI chart from the monthly, weekly and daily timeframes shows a reversal in trend to the upside with key resistant levels being breached and price holding above major and intermediate supports on high market participations as shown in volume relatively compared to previous months trading activities by market participants.

Recovery which started in the month of February 2016 after the composite NSEASI hit a low of 22,331 basis point has since seen the index trading above this low forming an higher low subsequently until a breach in the intermediate resistance occurred the week 20/5/2016 at above 26,361 bps (now becoming a support level). 

From top to bottom trend analysis:

As mentioned above, the monthly chart indicates accumulation phases (still to be regarded as a corrective wave) with a higher low on high market activities.

• Index price action find support at the lower Bollinger band trending towards EMA 20 day perio
• Price trends to retest the year’s opening price at 28,707.30 bps
• Oscillator indicator hovering in the sell territory below 50 levels, currently at 40 levels
• Bollinger band indicators shows that market since the opening of trading session in 2015 is in the southern region (trending below Mid-point EMA 20 and lower band)
• Volume analysis shows more bargaining interest from the investing communities as activities soured up about 58% relatively compared to previous month  

 

Weekly chart trend analysis:

Inline with the higher timeframe (monthly chart) the trend has since indicated a corrective wave movement.

In the weekly timeframe, the index clearly shows a breached in resistance zones 26,421.70 – 26,361 bps with a continued higher low.

Oscillators indicator as seen in the RSI 14 day period currently trades above the 50 mark a bullish zone and MACD above the water mark. This gives an early signal of a possible reversal in trend.

Positive divergence between the weekly chart and RSI 14 day period

Volume has relatively being average

 

Daily trend analysis

As with the two higher timeframe trend analysis above (Monthly and weekly chart analysis) the daily charts reflects a upward channel trend movement in the index.

RSI 14 day period correcting after reaching above the 75 mark now back to 59.

Index currently trade in the bullish zone of the Bollinger band trading system (in between higher Bollinger band and EMA 20)

 

Overall Sentiment:

Short term: Bullish
Medium term: Bullish
Long term: Neutral

Our Expectations:

our expectations in the coming months is a strong rally to the upside first to retest and possibly breach the year’s opening price at 28,707.30 bps thereby turning the index into a positive level for the on-going trading year. Evidently resistance 26,361 bps which was breached has thus become a support as profit taking was only able to make the index retest this level and rebound to continue the uptrend. Timely entry is important as we expect minor corrections for better entries.

Recommendations

The stock market currently avail potentials to both value and speculative investors as equities from the banking, industrial goods among.

 

For more analysis, realtime trade calls and Technical analysis education of stocks both for Nigerian Equities Trading and other global markets, mail trendonomicsng@gmail.com or contact 09092133294 to join our mailing list.

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