Nikkei 225 Technical Analysis: Keep Watch On Mid-Range Support
- The Nikkei 225 has established itself in a broad, higher range
- Right now it’s is more or less in the middle of it
- However, it is perhaps showing signs of preparation for another, gradual push higher
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My last technical look at the Nikkei 225 suggested that the index was consolidating, albeit within a relatively new and higher range.
Since then it has done just that, carving out a wide trading band between May 31’s intraday low of 19580 and June 20’s intraday top of 20321. At current levels, sits snugly if unexcitingly in the centre of that band. Moreover, its Relative Strength Index is firmly in the neutral zone at 47 or so, flagging neither significant overbuying or overselling.
So, we have a broad, established range that shows little obvious sign of breaking and a market neither wildly keyed-up nor overly gloomy. Is this then perhaps the dullest piece of technical analysis you’ll read today?
Well, hopefully not quite. For, within that range, the index seems reluctant to test downside any lower than June 29’s intraday low point at 19868. That level has contained bearish forays since mid-June and is becoming more notable. Two such forays have halted at or around there in the last seven sessions.
In short, this is becoming a level to watch. If it continues to hold then bulls can perhaps look forward to the establishment of a new, higher range which would mean that the index looks even more comfortable above the psychologically crucial 20,000 point.
If it gives way then the current range base would be back in view for the Tokyo benchmark and may need stout defence.
--- 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.