- The Nikkei has bounced smartly from its first dip below key support
- The highs of mid-Februay are in sight
- However, they’ll need to be retaken if that support is not to be tried again
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The Nikkei 225 has bounced quite convincingly back above a range of support which seems quite formidable once more.
It comes in between the intraday low of February 9, which was 20,533, and the closing low of March 2 at 21,023. Now admittedly the index has been below that range recently. But it didn’t stay there for long.
Moreover, it’s worth noting in passing that the range base, 20,533, is just above exactly on the 61.8% Fibonacci retracement on the Nikkei’s long rise up from the lows of mid-April, 2018 to the 26-year peaks of 2018.
The heavy global falls of March 22 and 23 took the Nikkei down below that, but it had come back above the range top within four days.
Ever since that top has provided support, notably on Wednesday of this week when the intraday low was marked exactly there.
Recent gains have seen Nikkei bulls attempt to get back toward recent highs, made in mid-March. So far they’ve been only partially successful at this however. They’ve taken the index back to March 20’s 21,453, but have been unable to push on towards that peak, which was March 13’s 22,080.
Still, it’s hard to avoid the suspicion that that area will need to be recaptured shortly if the index is not to wilt back towards its current support zone, a move which might raise the prospect of a longer-term slip below it. Either way this week’s closing levels should be very instructive for the index’s immediate direction and should be closely watched.
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— Written by David Cottle, DailyFX Research
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