If you are bored of all of the volatility in stock markets and are looking for more of a range bound asset, the Nikkei 225 might be the place for you.
- The Nikkei 225 Index has rallied again during the trading session on Tuesday, as we see Tokyo show signs of strength.
- It’s worth noting that we have been in a rectangle for quite some time, and that has most certainly not change.
- At this point, we are hanging around the ¥27,300 region, which is right around the middle of the overall consolidation.
Nikkei 225 Technical Analysis
Looking at this chart, the market is likely to see a lot of back-and-forth, now that we are essentially in the realm of “fair value”, this could literally be a 50-50 proposition at this point. Nonetheless, it does look as if markets will more likely than not continue to find buyers based upon what I’m seeing around the world, but as the Nikkei 225 has stretched itself a little bit further to the outside than many others, it may be due for a short-term pullback.
The Stochastic Oscillator is in the overbought condition, but I would not be too concerned about this at this point, due to the fact that we had just jumped quite a bit recently. The last couple of days have all featured gaps, therefore it does look like the Nikkei 225 may be overdone, at least in the short term. A pullback to the ¥26,500 level could be a potential support level, so we will have to see whether or not that holds out and keeps buyers involved.
On the other hand, if we were to break above the top of the candlestick for the trading session on Tuesday, it’s possible that the Japanese will then try to push towards the ¥28,000 level, where we had gapped from to fall down to the bottom of this rectangle during the most recent swing.
Either way, if you are bored of all of the volatility in stock markets and are looking for more of a range bound asset, the Nikkei 225 might be the place for you. That being said, we will eventually break out of this rectangle, and when we do it should lead to a fairly large move, measuring roughly ¥2500 before it’s all said and done. Obviously, the Nikkei 225 does not operate in a vacuum, so pay attention to other indices around the world as well, as it could give you an idea as to how traders are “feeling” at the moment.