Nikkei 225 Technicals: Short-term Support vs Long-term Resistance

Yesterday was a good day for Japanese Stocks. Nikkei 225 Futures went up by more than 1,000 points within 12 hours due to BOJ’s new bold monetary policies. Amidst Kuroda’s promise to improve domestic consumption and economic growth with the 2% inflation target – which he said is fully achievable, BOJ’s announcement also have a weakening impact on Yen with a target to double monetary base within 2 years. The weakened yen implies even better profit margins for Japanese exporters, resulting in the huge rally seen.

Hourly Chart

Everything that goes up must come down eventually. Unfortunately for the bulls, N225 futures pulled back significantly after today’s Tokyo open, with the Futures prices realizing that it has gotten way ahead of itself (Physical index wasn’t trading overnight). Price went below the fabled 13,000 mark, but remained supported by the rising Channel top that has been in play since 2nd April. Interim support can be found around 12,900 which is the confluence with the rising channel top. Stochastic readings are also pointing higher, adding to the possibility of price rebounding from here.

Daily Chart

Daily Chart is less optimistic, with the daily channel top acting as resistance, opening up Channel Bottom. However, Stochastic readings are heading higher though, suggesting a bullish breakout may be possible especially if US fundamentals e.g. NFP is in favor of a bullish push. However, given what ADP and Initial Claims have show us, the likelihood of a bad NFP print remains higher. Key levels to watch for next week would be the peak of 15th March should price head lower early next week. A breach of the level may initiate bearish acceleration towards Channel bottom.

More Links:
USD/SGD Technicals – BOJ Overflow not able to break higher
USD/JPY Technicals – Resuming Long Term Bull Trend
Gold Technicals – No demand despite BOJ’s inflation risks

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