The JP 225 index has experienced a significant drop, reaching a 10-month low of 30,361. This decline can be attributed to recession fears in the US and the strengthening of the yen. The index’s movement below its 200-day simple moving average indicates a sharp correction, reminiscent of early pandemic levels.
The index closed around 33,336, which is near the 161.8% Fibonacci extension of a previous upleg, providing some support against further downside pressure. However, to reach the next resistance level at 35,470, the index must first surpass the hurdle at 33,585. Additional barriers include April’s low of 36,692 and the 200-day SMA before reaching the 38,000 psychological mark.
Both the RSI and the stochastic oscillator suggest that the market is approaching oversold levels, indicating a potential exhaustion of bearish momentum. A failure to hold above the 33,130 region could delay any recovery attempts, shifting focus towards the ascending trendline at 31,400. However, even this support level was unable to prevent the recent downward trend.
If selling pressure continues, the index may revisit the October double bottom area of 30,300, with the next pivot point at 29,300. Breaking above 33,585 is crucial to signaling a potential reversal in the current downtrend. Without this breakthrough, selling interest is likely to persist in the coming sessions.
Overall, the JP 225 index faces significant challenges in its path to recovery. While technical indicators suggest a possible turnaround, overcoming key resistance levels will be essential to shift the current bearish sentiment. Traders and investors should closely monitor developments in the market and be prepared for continued volatility in the days ahead.
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