Are Japanese Stocks Setting Up to Fall?

0
31


NIKKEI 225 Technical ANALYSIS – TALKING POINTS:

  • Nikkei 225 may be readying to resume downtrend after rebound
  • Upswing from March low forming bearish Rising Wedge pattern
  • Pivotal trend line, Fibonacci resistance just below 21000 eyed

Japanese stocks are perched at a defining technical barrier just below the 21000 figure. A violent selloff started in mid-February took out trend support set from December 2018, putting prices at a four-year low by late March. The subsequent upward reversal has brought the index back for a retest of support-turned-resistance, now reinforced by the 61.8% Fibonacci retracement at 20810.

How prices behave at this juncture is likely to establish whether gains scored over recent weeks represent trend change or merely a correction before the selloff resumes. The path of recovery has traced out a Rising Wedge chart formation, which typically carries bearish implications. Confirming as much calls for a daily close below the pattern’s lower bound, a barrier bolstered by the 50% Fib at 19815.

Establishing a foothold back above the 21000 figure may neutralize near-term selling pressure. Doing so looks likely to open the door for a rise toward a block of back-to-back resistance levels running from the 78.6% retracement at 22225 to the upper bound of former range support at 23090. If prices manage to work their way through that, the long-term top in the 24200-515 zone comes into view.

Nikkei 225 Technical Analysis: Are Japanese Stocks Setting Up to Fall?

Nikkei 225 daily chart created using TradingView

Equities Forecast

Equities Forecast

Recommended by Ilya Spivak

Get Your Free Equities Forecast

NIKKEI 225 TRADING RESOURCES:

— Written by Ilya Spivak, Head APAC Strategist for DailyFX

To contact Ilya, use the Comments section below or @IlyaSpivak on Twitter





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here