Nikkei 225 Technical Analysis: Nasty Slip Did No Lasting Damage
- The Nikkei’s uptrend has been threatened, but still endures
- The index may now be attempting some consolidation at higher levels
- Momentum indicators suggest that this should not be too tall an order
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The Nikkei 225’s swoon on May 16 and 17 have put a nasty dent in a promising uptrend but have not fatally holed it.
Before those falls the index had put in an impressively bullish performance. Indeed, it had risen for sixteen of the 25 prior sessions with no notable losses even on the days when it did finish in the red.
Those sessions are the kernel of an uptrend which began on April 17 and which still endures, as you can see:
One modest caveat might be that the lower bounds of this trendline are simply the intraday lows of April 19 and, more recently, May 18. These are probably not the sort of significant support levels to which bulls could look for much succor in a serious downturn but, for the moment at least, their uptrend line is unthreatened.
And with support in mind we should probably look at where the index most recently bounced: last Friday’s 19473 level, which also contained the sharp, two day fall we were talking about at the start of this piece. While not especially significant, it did form a closing low back in early March. And it was the level around which the index held for about nine sessions after that point, so it may be worth watching again now.
With that support holding and the uptrend intact then it looks as though the bulls still have the reins here. It’s also worth pointing out that the relative strength indicators do not suggest that there is any overbuying of the index at present, even if they have crept up a little in recent days.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.