NIKKEI 225 TECHNICAL ANALYSIS – Talking Points:
- Nikkei 225 chart shows prices threaten break of support from August floor
- Confirmation to signal reversal in near-term uptrend, expose 6-month lows
- USD/JPY chart setup offers cautious support to a bearish Nikkei scenario
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Japan’s Nikkei 225 stock index has edged lower since last week’s breakdown in the USD/JPY exchange rate warned of potential for on-coming weakness, as expected. Prices are now within a hair of breaking trend line support guiding them higher since late August.
From here, a daily close below this barrier as well as resistance-turned-support at 22505 that follows almost immediately thereafter would suggest a near-term trend change is afoot. Sellers would then 22120, followed by a price congestion zone in the 21680-825 region.
Immediate resistance stands at 23660, the November 7 high. A rebound that secures a foothold above this threshold with confirmation on a closing basis would probably see buyers taking aim at the 24200-515 area, marked by a double top that has contained upside progression since late January 2018.
Daily Nikkei 225 chart created with TradingView
For its part, the anti-risk Japanese Yen has inched a bit closer to building on last week’s maybe-telltale reversal. USD/JPY has conspicuously backed off after retesting resistance at the site where it cracked the floor of a bearish Rising Wedge chart pattern. Extension downward may not be far behind.
Daily USD/JPY chart created with TradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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