The Nikkei 225 index, also known as Japan 225 on FXOpen, has experienced a significant upward trend recently. After reaching a yearly high above 42,500 points on 10th July, the price surged, breaking resistance at 41,160. However, the bears quickly made a comeback, pushing the price back to the 41,160 level. This led to the gains from 9-10 July being completely offset.
Technical Analysis Insights
Analyzing the technical aspects, the price is still within the upper half of a significant ascending channel that originated in 2023. There is no conclusive evidence yet that the price is consolidating below the 41,160 level. However, there is a possibility that the bears could break below the median of the blue channel and consolidate below 41,160. This could lead to the formation of an important descending channel for the Nikkei 225 index.
Bearish Trends and Potential Breakout
Bearish drivers, such as technology stocks like Tokyo Electron, have influenced sentiment in the Japanese stock market. Following sell-offs in US technology stocks, Tokyo Electron experienced a decline of more than 6% in one day. Additionally, risks of interventions by the Bank of Japan to support the yen have further impacted the market.
Looking ahead to the second half of 2024, there is a potential for a break of the lower boundary of the blue channel. This could signify a significant shift in the trend of the Nikkei 225 index. Traders are advised to monitor the market closely and consider potential strategies to navigate the changing landscape.
The Nikkei 225 index has experienced both highs and lows in recent days. The technical analysis suggests a possible shift in the trend, with the emergence of a descending channel. Traders should exercise caution and stay informed about market developments to make informed decisions. As always, it is essential to conduct thorough research and analysis before making any trading decisions.
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