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Nikkei 225 Technical Analysis: Bulls Still Have Big Gap To Fill


DailyFX.com -

NIKKEI 225 TECHNICAL ANALYSIS TALKING POINTS:

  • Dominant uptrends should be respected
  • A long climb loo ks
  • Consolidation will probably occur before it ends

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The Nikkei 225 is right in the middle of an uptrend channel that it looks quite foolish to bet against for now.

The channel itself is an extension of the Tokyo stock benchmark's long, consistent rise up from the lows of late March.

US Dollar VS Japanese Yen, Daily Chart

It probably gives us more usable clues than would a broader band encompassing all trade since that date, as it has seen more tests of both the upside and the down.

That upside now comes in above the market at 23180.6, and the upper channel bound should probably regarded as solid resistance in the absence of any clear evidence to the contrary on a daily-closing basis. The lower channel bound comes in at 22780, and should provide support on the same basis.

If it doesn't, reversals should find a prop at 223222, which is the first, 23/6% Fibonacci retracement of the total rise.

Bulls have the year's peaks in their sights once again but, before they can retake them, they'll need to erase the memory of the sharp fall which took place between January 30 and February 8. The current uptrend will get them there, but it may not do so terribly quickly.

.US Dollar Vs Japanese Yen Daily Chart

Assuming it is respected the index should have wiped out that fall by early June, if it can get to 23747.

There is likely to be some consolidation before that though, if not a more severe setback. The index is still flirting with overbought levels, according to its Relative Strength Index, and would stray back into clear overbought territory now on just a modest further uptick.

Still, the broad uptrend continues to look like one to respect.

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--- Written by David Cottle, DailyFX Research

F ollow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!


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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Forex


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