Technically speaking: The recent drop in NEPSE index.

Nepse index should fall to 480-470. Head & Shoulder pattern, which is generally regarded as strong reversal pattern in uptrend, has been observed in the NEPSE. Emotions of the traders start to envision in the chart. Sign of danger starts to loom in the NEPSE bull.

Head and shoulder pattern includes left shoulder (LS), right shoulder (RS) and a head (H) as shown in the figure.  There is interesting psychology behind this pattern. Every ups and down in index tells the story of the market- the fight between greedy bulls, fearful bears and opportunist hogs. In an uptrend, when the bulls lose control of the securities, bears strike them with paws and they begin to slow down. Left shoulder begins to shape. Market falls to a level where bulls again feel of gaining control of the market. This level is called neckline which is shown in the bold dotted line (about 515 index value) in the chart. Here, left shoulder completes. From neckline, bulls become bolder and they buy more. Head begins to shape. This pushes market up and makes a new high (560 level in the chart). Some bulls take the profit in the new high and some join the party wishfully thinking that the celebration will continue. They are known as hogs. These super greedy bulls get slaughtered when the number selling pressure soaks all the buying pressure in the new high which now becomes resistance (around 550 index). From resistance sell orders increases and the market takes the dive .The selling pressure eases in the neckline. The Head completes. Some stupid bull begins to buy again in the neckline and try to create another high.  After some time, they completely lose confidence about their buying decision and begin to dump their positions at small profit.  They unknowingly create right shoulder, their own leader (at around 525 index value). From here, buying pressure completely dries up and selling pressure started to propel and strikes the neck line. This time, there will be no one left to buy. Sell orders increase, fears mounts among buyers and the neck line breaks. Head & shoulder pattern completes.

After the break of neck line the market falls to the recent new low before bulls become bolder and starts buying again. That level can be computed in the chart by measuring the height of neckline from the top of the head of the Head & Shoulder pattern. In NEPSE, this comes around 480-475 index value which is important 32% Fibonacci retracement level. Something has to change from this level. Will NEPSE bounce from this level? If it bounces from there, how far it can go? In my point of view, the strength and height of the bounce depends on the context. If it improves, NEPSE will see new high soon. If it doesn't, it should fall to new low (430 level), another important 50% Fibonacci retracement level, before bulls get their back on the wall and start to fight back with full force. Right now, as Dr. Elder notes in his famous book, NEPSE bulls are like children whose father hit them with strap during the course of happy meal.