Technical Analysis – JP 225 index tops near channel’s upper band
May 16, 2023 12:27 pm
Japan’s 225 stock index (cash) flatlined near a 1½-year high of 29,918 and at the upper boundary of a bullish channel after a remarkable two-week rally.
The RSI and the Stochastic oscillator in the four-hour chart seem to have peaked in the overbought region, flagging a potential downside reversal. The tiny candlesticks at the top of the uptrend could be another indication that the latest upswing is overdone.
If the bears take charge below 29,840, the price may seek shelter somewhere between 29,650 and 29,540. The 20-day simple moving average (SMA) is converging in the same region. Therefore, a step lower could generate a more aggressive decline towards the former resistance zone of 29,270. Another bearish extension here would neutralize the short-term outlook, likely motivating fresh selling towards the channel’s lower boundary seen at 29,060.
Should the bulls brighten the outlook above the channel, traders may engage in some profit-taking around the 30,000 psychological mark. In the event of a steeper rally, the price will target the 2021 record highs registered within the 30,400-30,800 zone.
All in all, the latest ascent in Japan’s 225 index seems to have reached a peak, with the technical picture sending a warning for a potential downside reversal.
Japan’s 225 stock index (cash) flatlined near a 1½-year high of 29,918 and at the upper boundary of a bullish channel after a remarkable two-week rally.
The RSI and the Stochastic oscillator in the four-hour chart seem to have peaked in the overbought region, flagging a potential downside reversal. The tiny candlesticks at the top of the uptrend could be another indication that the latest upswing is overdone.
If the bears take charge below 29,840, the price may seek shelter somewhere between 29,650 and 29,540. The 20-day simple moving average (SMA) is converging in the same region. Therefore, a step lower could generate a more aggressive decline towards the former resistance zone of 29,270. Another bearish extension here would neutralize the short-term outlook, likely motivating fresh selling towards the channel’s lower boundary seen at 29,060.
Should the bulls brighten the outlook above the channel, traders may engage in some profit-taking around the 30,000 psychological mark. In the event of a steeper rally, the price will target the 2021 record highs registered within the 30,400-30,800 zone.
All in all, the latest ascent in Japan’s 225 index seems to have reached a peak, with the technical picture sending a warning for a potential downside reversal.
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