Nikkei 225, Japan stocks, NKY – Technical Outlook:
• The Nikkei 225 has been stuck in a sideways market for several months;
• The overall trend of the index is still up.
• What are the key levels to watch?
Nikkei225Index Technology Outlook – neutral
Nikkei225Rather than a reversal of a multi-year uptrend, the index appears to have formed a paused price pattern over the past two years.
Although last year’s Nikkei225The index has been generally weak, but it has been resilient, partly reflecting trends that have developed in recent years(see monthly chart).2015Year Triggered Major Double Bottom Pattern(2003year and2008/2009year low)Setting the stage for a reversal in a multi-year bear market. Subsequent higher highs and higher lows on long-term charts are indicative of an uptrend.
Nikkei225Index Monthly Chart
useTradingViewCreated chart
Having said that, the uptrend has been choppy, reflecting the long20The resolution of the bear market in 2009.However, during periods of heightened volatility across financial markets, includingcovidplunge and2022The index has held on to key support levels during the broader market’s weakness in 2019.
Looking at the weekly chart, the index has been holding above a fairly strong buffer of convergence:200weekly moving average and2018high point of the year. On the shorter time frame charts, there are some tentative signs of improving upward momentum.In this regard, in2022the horizon at the beginning of the year(about28500point)Any breakout above could set the stage for a resumption of the long-term uptrend, hopefully towards2021year high30795Point challenges to open the way.Any breakthrough could be32000-33350Pave the way, including1990-2008/2009year down78.6%Fibonacci retracement levels and1990mid-year highs.
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Nikkei225Index Weekly Chart
useTradingViewCreated chart
From a fundamental point of view, due to the Bank of Japan(BOJ)With Japan’s ultra-loose monetary policy and a weak yen, Japanese stocks have been resilient in recent months. In addition, the Japanese economy continued to recover, driven by consumer spending. However, if the Bank of Japan decides to raise interest rates sharply in response to accelerating inflation, it could hurt stocks.
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(by Manish Jaradi)
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