Nikkei 225 Technical Analysis: Uptrend Holds, Tough Highs Loom

Nikkei 225 Technical Analysis: Uptrend Holds, Tough Highs Loom

Talking Points:

  • The Nikkei 225’s uptrend endures
  • But it has yet to retrace February’s sharp falls
  • Doing so could be very tough

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The Nikkei 225 remains firmly in the broad, strong uptrend which has been in place since the lows of late March.

It’s rise has taken it past the previous significant peak, which came in at March 13’s intraday high of 22,105.5. The index is now in a band of which that level now forms support and with near-term resistance at hand in the form of February 27’s intraday top, 22,498.

If the bulls can keep their uptrend going, they will soon face the perhaps daunting task of fully retracing the sharp falls suffered by the Nikkei between February 2 and 5. They took the Tokyo stock benchmark down more than 1,600 points and won’t be fully erased until the index tops 23,360.

Nikkei 225 Technical Analysis: Uptrend Holds, Tough Highs Loom

This looks like a very big ask for the moment, although the index does seem to have its sights on that February top.

However, with its Relative Strength Index rising, albeit not yet into overbought territory, the index will probably need a consolidative pause around that level before setting out higher again.

Reverses will probably find initial support at the current uptrend line. It comes in at 21,879 at the moment.

There’s probably further support at 21614.6, That’ the 50% Fibonacci retracement of the rise up from last August’s lows to the highs of January. Below that lurks 61.8% retracement at 21,007 and 50% retracement at 20,255. Tellingly that last level is just about exactly where the Nikkei’s fall was arrested back in late March.

Nikkei 225 Technical Analysis: Uptrend Holds, Tough Highs Loom

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— Written by David Cottle, DailyFX Research

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

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