Stochastic and Momentum Analysis of Nepalese Stock Market

Abstract

The stochastic oscillator is one of the popular tools used by technical analysts. The tools are used mainly to find the overbought and oversold position in the stock market. The stochastic values are between 0-100 which helps to determine the market scenario. The two stochastic indicators are comprised of two lines namely; %K and %D. The investors using the short-term moving average follows %K and for long-term moving average for %D. Though, both are used for buy signal or sell signal by the investors. The basic concept is if, the value of %K is seen above %D, which reflects to sell position, which in context to Nepalese stock market, the scenario is seen during the month of June-July of every fiscal year. At the same time, momentum uses transaction signal or trade signal or the zero ‘0’ line to find the bearish or bullish trend of the market. The momentum of NEPSE index clearly pictures out the bullish and the bearish trend for a specific duration. If the momentum line touches the ‘zero line’, the NEPSE has changed its trend.

Stock Movement Prediction Using Machine Learning Based on Technical Indicators and Google Trend Searches in Thailand

“…Technical indicators can be used to infer the behavior or trends of a time series and can be used to forecast the price of securities (Alfonso and Ramirez 2020;Anghel 2015;Basak et al 2019;Bhargavi et al 2017;Bustos and Pomares-Quimbaya 2020;Dash and Dash 2016;Perry 2011;Praekhaow 2010;Vaidya 2018). This study demonstrates how techniques can perform a summary rather than the full time series of securities prices, which simplifies machine learning.…”

“…The indicator's volatility can be smoothed somewhat by changing the time interval being measured. The most frequently used stochastic oscillators are Stochastic Oscillator K (K) and Stochastic Oscillator D (D) (Vaidya 2018). The K line compares the lowest low and the highest high of a given period to define a price range, then displays the last closing price as a percentage of this range.…”

“…Second is reliability, namely (1) Moving Average Convergence Divergence (MACD), which provides information on both trend and momentum of the stock prices, and (2) Relative Strength Index (RSI), used to determine the probability of a trend reversal. Third is momentum, represented by Stochastic Oscillators K and D to compare the closing price with a range of prices for a given period of time (Bhargavi et al 2017;Bustos and Pomares-Quimbaya 2020;Perry 2011;Praekhaow 2010;Vaidya 2018).…”

A combination of machine learning based natural language processing with technical analysis for stock trading

“…STO can be used to provide trading signals, either overbought or oversold conditions. This technical indicator presents the stock's closing price concerning the high and low stock prices, ranging over a specific duration, typically 14 days [21]. Two lines represent the equation for calculating %K and %D, which are values between 0 and 100.…”