Technical Analysis – JP225 index advance stalls; bears prepare for a comeback
April 20, 2023 8:04 am
The JP225 cash index is edging higher today, but the aggressive rally recorded since March 15 appears to have stalled at the 28,650 area. The current price action is a repeat of the early March movement when the bulls failed to close above the aforementioned area, prompting an around 8% sell-off to 26,457.
On face value, the momentum indicators are still bullish. But closer examination reveals some cracks in the short-term bullish trend. More specifically,the Average Directional Movement Index (ADX) appears to have peaked and thus a sustainable drop from the recent highs would point to a more balanced JP225 index price action going forward. Similarly, the stochastic is hovering at its overbought (OB) area. While it can stay in this area for a while, a potential break below its moving average and its OB could contribute to a reversal of the prevailing bullish trend.
Should these signs infuse confidence in the bears, the first target would come at the Jun 9, 2022 high of 28,394. The 23.6% Fibonacci retracement level of the March 8, 2022 – August 17, 2022 uptrend at 28,113 could prove tougher to overcome, just ahead of the much busier 27,755-27,852 range that is defined by the February 6, 2023 high and the 50-day simple moving average (SMA) respectively.
If the bulls decide to ignore the mixed technical signs and break the crucial 28,649 level, they would set their eyes on the January 14, 2021 and August 17, 2022 highs at 28,976 and 29,229 respectively. Should they successfully break these levels, the path is clear for the 30,000 area.
To conclude, the JP225 advance has stalled at the early March peak. With the overall technical picture revealing cracks in the bullish sentiment, the bulls’ window of action appears to be narrowing.
The JP225 cash index is edging higher today, but the aggressive rally recorded since March 15 appears to have stalled at the 28,650 area. The current price action is a repeat of the early March movement when the bulls failed to close above the aforementioned area, prompting an around 8% sell-off to 26,457.
On face value, the momentum indicators are still bullish. But closer examination reveals some cracks in the short-term bullish trend. More specifically, the Average Directional Movement Index (ADX) appears to have peaked and thus a sustainable drop from the recent highs would point to a more balanced JP225 index price action going forward. Similarly, the stochastic is hovering at its overbought (OB) area. While it can stay in this area for a while, a potential break below its moving average and its OB could contribute to a reversal of the prevailing bullish trend.
Should these signs infuse confidence in the bears, the first target would come at the Jun 9, 2022 high of 28,394. The 23.6% Fibonacci retracement level of the March 8, 2022 – August 17, 2022 uptrend at 28,113 could prove tougher to overcome, just ahead of the much busier 27,755-27,852 range that is defined by the February 6, 2023 high and the 50-day simple moving average (SMA) respectively.
If the bulls decide to ignore the mixed technical signs and break the crucial 28,649 level, they would set their eyes on the January 14, 2021 and August 17, 2022 highs at 28,976 and 29,229 respectively. Should they successfully break these levels, the path is clear for the 30,000 area.
To conclude, the JP225 advance has stalled at the early March peak. With the overall technical picture revealing cracks in the bullish sentiment, the bulls’ window of action appears to be narrowing.
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