Nikkei 225: Challenging Significant & Vital Resistance

Robert Petrucci

As global equity indices have tracked higher, the Nikkei 225 has begun to draw closer to long term resistance which has proven to be a barrier since December of 2017.

In the wake of coronavirus and its implications on national economies, Japan has certainly been at the forefront of headlines because of its significant financial and geopolitical importance. Just before the pandemics' ability to stop the world in its tracks, the Nikkei 225 was traversing near crucial resistance around the 24,000.00 juncture. When coronavirus sent shivers into the global equity markets, the Nikkei 225 suffered a downturn like many other indices and fell to lows in late March.

The Nikkei 225 however has recovered and followed in step with the major US stock exchanges and its bullish momentum since touching lows in March has been clearly demonstrated. As of today, the Nikkei 225 is challenging important resistance around the 23,300.00 juncture. And speculators who believe risk appetite globally will remain strong likely have their eyes on higher targets. If the Nikkei can challenge and overcome the 23,400.00 level it would be a significant step because it would put the index within the vicinity of pre-pandemic values and cause investors to consider key inflection points.

Resistance near the 23,400.00 level was surpassed briefly yesterday, but incremental selling did seep into the Nikkei 225.  However, the downward track was not violent and volumes remain comfortable within the Japanese index, which indicates if the current values between 23,200.00 and 23,350.00 hold it may prove that another move upwards can be demonstrated.

The Nikkei 225 has delivered traders plenty of volatility throughout the years.  The index is an important barometer of global risk appetite. If the major Japanese index can sustain its current values, speculators should consider buying the Nikkei 225 within it current levels and look for upside momentum to develop.

The Nikkei 225 has gained nearly 15% the past year, but in the last month, the index has only gained approximately 2.37%, which puts in a comparable position to the DAX Index. US future markets are calling for a mixed opening today. However, the mid-term trend for global equity indexes has been solid and investor sentiment remains optimistic. Buying the Nikkei Index as these levels will need a strong speculative sentiment, but the potential for upside to emerge remains tantalizing.

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Nikkei 225 Index Short Term Outlook:

Current Resistance: 23,313.20

Current Support: 23,234.40

High Target: 23,400.00

Low Target: 22,900.00

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Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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