The Nikkei 225 made another solid move higher on Monday which followed in the footsteps from a strong close on the US equity markets before going into the weekend. Trading today on the Nikkei Index opened with a gap lower on what can be assumed to be profit-taking, but the Japanese index was able to quickly establish that it had the capability to sustain its higher territory and finished the day resting comfortably within eyesight of important psychological highs.
The Nikkei 225 is near the 29600.00 mark and traders will be keen to see this level proven vulnerable. Not that the 29600.00 level has been tested and failed, but the notion that it will represent another step higher on the value ladder may be proven to be important. Timing equity indices and their sudden spikes higher is a time-honored way to often fail while speculating. It is often better to simply pursue the trend and remain patient and not let sell-offs affect trading emotions, it also helps to have stop losses in place and ready to be activated.
The past month of trading is a solid example that speculators need to remain confident in technical trends with indices and the Nikkei 225 is a prime specimen for consideration. The ability to buy the Nikkei 225 on drawdowns and seek reversals higher can be effective. After yesterday’s stellar gains, it may have been hard to produce another upward day of momentum immediately, and the additional fact that US future markets early today are forecasting a rather mixed opening added to a cautious undertone on the Nikkei 225.
However, the bullish trend should not be ignored by speculators, and those betting against it need to be nimble and use their risk management extremely well. Resistance levels may be difficult to accurately pinpoint in bullish markets where new highs are being tested. Looking at highs made in 1990 for the Nikkei 225 has little correlation for the moment. So numbers like 29600.00 and higher rungs on the ladder upwards do carry psychological importance.
Yes, traders need to be cautious; they should not blindly bet on bullish momentum continuing. However, pursuing additional buying opportunities is the correct and logical choice for most traders. Cautious traders should wait for incremental pullbacks that come within technical support, but targeting higher values in the Nikkei 225 remains the attractive option.
Nikkei 225 Short-Term Outlook:
- Current Resistance: 29600.00
- Current Support: 29440.00
- High Target: 29800.00
- Low Target: 29275.00
