Most investors who track DSE mutual funds check one number: the NAV. It went up, good. It went down, bad. That is the entire analysis. But NAV is just a price — and prices have momentum, patterns, and signals that the raw number alone will never reveal.
Two indicators — RSI and MACD — can tell you whether a mutual fund’s NAV trend is accelerating, exhausted, or about to reverse. The tools are the same ones stock traders use daily on platforms like StockBangladesh and AmarStock. The difference is that almost nobody in Bangladesh applies them to mutual funds. Which means if you learn to, you will see what the rest of the market is not looking at.
Here is how both indicators work, calculated step by step with numbers you can replicate yourself.
Why NAV Is the Only Price That Matters
Before touching any formula, you need to understand one thing that separates mutual fund technical analysis from stock analysis: volume-based indicators are nearly useless here.
A stock’s price moves on supply and demand in real time — thousands of trades per second pushing the price up or down. Mutual funds do not work that way. Open-end funds calculate NAV once per day based on the market value of their underlying holdings. Closed-end funds trade on the exchange, but their price is still anchored to NAV. Volume tells you how many units changed hands, not where the fund’s value is heading.
This is why momentum indicators built on price — RSI and MACD — are the right tools. They measure the speed and direction of NAV changes over time, which is exactly what a mutual fund investor needs to evaluate.
The question is how to calculate them. And it is simpler than most guides make it appear.
RSI: Fourteen Days of NAV Changes, One Number
The Relative Strength Index, developed by J. Welles Wilder Jr. in 1978, compresses fourteen periods of price movement into a single value between 0 and 100. Here is the entire calculation in five steps.
Step 1: Collect 14 consecutive NAV prices for your fund. If you are tracking a closed-end fund like Grameen One (Scheme Two), the daily trading price works. For open-end funds, use the daily NAV published by the asset manager or available on the LankaBangla Financial Portal.
Step 2: Calculate the daily change for each period. Day 2 NAV minus Day 1 NAV. Day 3 minus Day 2. Fourteen changes total.
Step 3: Separate those changes into gains (positive changes) and losses (absolute value of negative changes). If a day’s NAV did not change, both gain and loss are zero.
Step 4: Average the gains over 14 periods. Average the losses over 14 periods. Then calculate Relative Strength: RS = Average Gain / Average Loss.
Step 5: RSI = 100 - (100 / (1 + RS)).
An RSI above 70 suggests the fund’s NAV may be overbought — momentum has been strong but could be due for a pause. Below 30 signals oversold conditions, where selling pressure may be exhausted. Between 30 and 70 is neutral territory.
For mutual funds specifically, consider using a 21-day period instead of 14. NAV changes tend to be more gradual than individual stock moves, and the longer window filters out noise that would generate false signals on a standard period.
But knowing the RSI value alone is not enough. You need to know whether the trend behind it is strengthening or weakening — and that is what MACD reveals.
MACD: The Trend Behind the Momentum
Moving Average Convergence Divergence, created by Gerald Appel in the late 1970s, tracks the relationship between two exponential moving averages of NAV. It has three components, and each one tells you something different.
MACD Line: Calculate the 12-period EMA (Exponential Moving Average) and the 26-period EMA of your fund’s NAV. Subtract the 26-period from the 12-period. When this line is positive, the shorter-term trend is above the longer-term trend — the fund’s NAV is in an uptrend.
Signal Line: Take a 9-period EMA of the MACD Line itself. This smooths out the MACD’s fluctuations and creates the crossover signals traders watch for.
Histogram: MACD Line minus Signal Line. When the histogram is positive and growing, upward momentum is accelerating. When it shrinks toward zero, the trend is losing steam.
The signals that matter most for mutual funds are zero-line crossovers. When the MACD Line crosses above zero, the fund’s NAV has shifted from a downtrend to an uptrend over the measured period. Below zero, the opposite. For funds you are considering buying, a MACD Line crossing above zero after weeks of negative readings is a stronger entry signal than RSI alone — it confirms that the trend direction has actually changed, not just that momentum temporarily spiked.
Combine them: an RSI rising from below 30 while the MACD Line crosses above its signal line is the closest thing to a technical buy signal mutual fund data can produce.
What These Indicators Cannot Tell You
Neither RSI nor MACD will tell you whether a fund’s underlying holdings are sound, whether the P/E ratio of the portfolio makes sense, or whether the fund manager is competent. DSE mutual funds traded at an average P/E of 4.16 in January 2025 according to CEIC Data — up from 3.28 in December 2024. That kind of valuation shift is a fundamental signal that no momentum indicator captures.
Technical analysis tells you when to act. Fundamental analysis tells you whether to act. The investors who consistently time mutual fund entries well on the DSE are the ones who refuse to use one without the other.
Disclaimer: This article is for educational purposes only. Past NAV performance and technical indicators do not guarantee future results. Consult a licensed financial advisor before making investment decisions.