INDEX BRIEFS – NIKKEI, JAPAN by DARYL GUPPY

The Nikkei has two important features. They are best seen on the weekly chart. The first is the series of trading bands. These provide support and resistance levels. This pattern of behavior is similar to the patterns seen with many other regional indexes, but the Nikkei is less developed. The upper edge of the current trading band is near 10400. The market consolidated in this area and is now retreating from this resistance level. The lower edge of this trading band is near 9000 and this is the new downside target. Traders will look for support consolidation in this area.

The second feature is the uptrend line starting from the March low. The position of this line was confirmed when the market developed a successful breakout above the long term downtrend line. The drop below the new uptrend line is bearish. This uptrend line intersects the trading resistance band level. The failure of the market to push above this level and to remain above the uptrend support line sends a stronger bearish message. There is a low probability of a rally rebound developing prior to a retest of support near 9000. There is also a low probability the market will easily move above the resistance level near 10400.



The trading band extended from near 7500 to 9000. The trading band is used as a projection method and sets an upside target near 10400. This is a nominal target because it does not coincide with any previous support or resistance level. However it has proved to be a more significant resistance level than the historical 10,000 resistance level.

Regional markets have moved in double trade band projections. Using this method the next resistance level is near 11800. This is near to the strong historical support resistance level at 12,000. The rapid market fall from near 12,000 suggests there is little resistance to a rapid rise in the market. Once the market is above to move above 10400 here is a high probability the market will move quickly and smoothly to 11800 to 12000.

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Article contributed by Private Trader, Market Expert, Trading Coach and Best-Selling Author Mr. Daryl Guppy. For more articles and commentaries from Daryl Guppy, click HERE.