JPN 225 Technical Analysis: Poised for Upward Reversal
- Nikkei Strategy: Take profit of short, or buy in anticipation of rebound
- Clean break of 5-day moving average at 17,533 would be early signal
- Be mindful of correction and 16,890 support until downside movement is concluded
Nikkei looks poised for an upward reversal after more than one week of declines. The index re-opened up from yesterday’s futures values. Those with short positions may consider taking profit if it fails to repeat Friday’s low at 17,237. On the other hand, potential buyers should watch out for break of 5-day moving average as a signal to enter.
Existing downtrend signal has not abated in moving averages. As such, a test or break above 5-day MA would be necessary before a confirmation could emerge. An alternative prerequisite is a return of Nikkei to the area above September low at 17,483.6.
Momentum signals have lined up for a potential rebound, similar to one in December. However that occasion did not result in a complete recovery, but rather an ensuing correction period. The same caution should be taken at any upward signs this time.
Daily Chart - Created Using FXCM Marketscope
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--- Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh