Nikkei 225: Recent Highs Have Been Hit with Reversals Lower

Robert Petrucci

The Nikkei 225 is proving a tough battleground for speculators who are pursuing bullish sentiment.

The Nikkei 225 opened with a spike higher this morning, but was promptly sold off with a reversal lower. The Nikkei 225 remains within its higher value band, but it has also been hit by occasional bursts of apparent profit-taking, which makes trading the Japanese index a dynamic speculative environment. Traders are cautioned to use leverage carefully when wagering on the Nikkei 225.

The Nikkei 225, however, has also undoubtedly enjoyed a solid bullish run higher since March 2020. The value of the index is actually now testing levels which the Nikkei 225 has not sincerely seen since its famed bull market in the late 1980’s. Global risk appetite has changed a lot in the past 30+ years, but the Nikkei 225 remains a respected and highly invested equity market.

A high of 28975.00 approximately was touched on the 14th of January, but the past week of trading has produced choppy conditions on the Nikkei 225. Since that high was reached, the Nikkei 225 appears to have created a rather durable resistance level near 28715.00, but even this mark is above current market values, so traders should focus on support levels if they want to continue pursuing bullish speculation.

Buying the Nikkei 225 on pullbacks does appear to be a solid tactical trading choice short term. This morning’s spike upward, which was then followed by a reversal lower, serves as a reminder that volatility is part of the Japanese index and risk management needs to be practiced. Speculators may worry that waiting for pullbacks in the Nikkei 225 to launch buying positions may make them miss ‘the next big move’ upwards and that is a legitimate fear. Traders need to monitor the market closely.

Global risk appetite in equity markets does appear positive and the Nikkei 225 is likely to mirror this sentiment. The bullish trend has been strong and is likely to continue. Buying the Nikkei 225 remains the right decision, but conservative traders may want to use limit orders targeting support levels as ratios to launch their long positions. Future markets in the US are indicating a positive opening today, and if Wall Street follows through with a solid day, it can be expected to impact the Nikkei 225 with a potential buying surge in the short term.

Nikkei 225 Short-Term Outlook:

  • Current Resistance: 28600.00
  • Current Support: 28495.000
  • High Target: 28700.000
  • Low Target: 28400.000

Nikkei 225

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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