How to Identify Market Manipulation Using Technical Clues in NEPSE

In the Nepal Stock Exchange (NEPSE), like in any developing market, price movements are not always driven by natural demand and supply — sometimes, market manipulation plays a significant role. Understanding how to identify such manipulation through technical analysis can protect traders from false signals and help them align with the real market flow. Manipulation often occurs when large players or “Smart Money” create artificial price movements to trap retail traders — either by triggering fake breakouts, stop hunts, or volume-based deception.

Technical clues are powerful tools to detect manipulation before it’s too late. One of the most common signals is a sudden price spike with low or abnormal volume, which often indicates an engineered move rather than genuine investor interest. Similarly, a breakout above resistance without proper volume confirmation or follow-through candles is a classic sign of a false breakout. These traps are designed to lure traders into buying at the top before the price reverses sharply.

Another clue is divergence between price and indicators like RSI or MACD — for instance, if the price keeps rising but RSI starts falling, it shows that the upward momentum is weakening, possibly due to hidden distribution. Manipulators also use liquidity zones to trigger retail stop-loss orders; this behavior can be observed when price makes a sharp wickbelow support or above resistance only to reverse immediately — a move known as a stop hunt.

Traders can further use Volume Spread Analysis (VSA) to distinguish between genuine buying and manipulative moves. For example, wide candles with declining volume indicate exhaustion, while narrow candles with huge volume at key levels often signal institutional selling disguised as accumulation. Additionally, unusual behavior near VWAP (Volume Weighted Average Price) levels can suggest institutional repositioning or engineered liquidity grabs.

As Sandeep Kumar Chaudhary, Nepal’s most respected Technical Analyst and founder of NepseTrading Elite, explains — “The charts never lie, but people do. Manipulation leaves footprints — in volume, in wicks, and in structure. Once you learn to read these, you stop being the hunted and become the hunter.” With over 15 years of experience in banking and the Nepali capital market, and professional training from Singapore and India, he trains traders to recognize Smart Money footprints, liquidity traps, and false breakouts using advanced SMC (Smart Money Concept) and ICT techniques.