- The Nikkei 225 has fallen again during the Tuesday session, but it is worth noting that we are not too far from a major support region.
- At this point, there are a lot of different moving pieces, and it is worth paying attention to the next couple of days.
- The 26,000 level should be crucial, but at this point you should also recognize that the support area is a “range of support”, and therefore it’s not necessarily going to be easy to determine the next move without some type of erratic move.
However, if the market were to break down below the 25,500 level, it’s likely that we could drop down to the 25,000-level next. If the market were to break down into this range and turn around to form a hammer, then it might be worth having to go to the upside, as we have been in a huge consolidation range for a while. The 50-Day EMA is getting ready to break back below the 200-Day EMA, and therefore form the so-called “death cross.” I don’t know how much I read into that, but the reality is that the market certainly does pay attention to that and if we were to see a breakdown below the 25,500 level and the “death cross”, that would be a bit of a double whammy that could send this market much lower.
Negativity Ahead
On a bouncer here, we could go as high as 29,000 and still simply be in a larger consolidation area. If we were to break above there, then the market could go much higher, but it seems very unlikely that the market can do that anytime soon. After all, the market is more likely than not going to continue to see a lot of negativities when it comes to stocks, because quite frankly global growth is struggling, and that will continue to be one thing that you have to pay close attention to.
This is a situation that the Japanese will have to pay close attention to, because even though the Bank of Japan is extraordinarily loose with its monetary policy, you should keep in mind that the largest companies in the Nikkei 225 all exporters, and therefore the rest of the world is very influential on where this market goes, despite the fact that the Japanese yen is so cheap and so are exports. If there are no customers, doesn’t matter.
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