Technical Analysis – Japan 225 index close to 1-month lows; bearish in short-term
January 31, 2018 4:26 pm
Japan 225 index took a knock after reaching a multi-decade high of 24166, reversing most of its gains made since the beginning of the year. However, in the bigger picture, the index remains firmly in bullish territory.
In the short-term, the risk is to the downside given that the RSI is negatively sloped below its neutral zone of 50 and MACD has slowed down below its signal line, while in lower timeframe charts both indicators are also located in bearish territory. Moreover, the Tenkan-sen is pointing to the downside and the Kijun-sen has flattened, foreseeing a potential bearish crossover.
Should the market weaken, immediate support could come from the 50-day simple moving average line at 23087. Any close below this level could touch 22965, the 23.6% Fibonacci of the upleg from 19076 to 24166 (September 8 – January 23) which used to be a strong resistance from mid-September to early January. However, if the market makes a substantial step below the 38.2% Fibonacci of 22202, the medium-term picture would consequently turn bearish, shifting focus to the 50% Fibonacci of 21593.
In the alternative scenario, a move higher would see the 20-day SMA at 23713 which acted as a significant base in the past. Steeper upside extensions could bring the previous top at 24166 into view, with scope to test the 25000 psychological level.
Japan 225 index took a knock after reaching a multi-decade high of 24166, reversing most of its gains made since the beginning of the year. However, in the bigger picture, the index remains firmly in bullish territory.
In the short-term, the risk is to the downside given that the RSI is negatively sloped below its neutral zone of 50 and MACD has slowed down below its signal line, while in lower timeframe charts both indicators are also located in bearish territory. Moreover, the Tenkan-sen is pointing to the downside and the Kijun-sen has flattened, foreseeing a potential bearish crossover.
Should the market weaken, immediate support could come from the 50-day simple moving average line at 23087. Any close below this level could touch 22965, the 23.6% Fibonacci of the upleg from 19076 to 24166 (September 8 – January 23) which used to be a strong resistance from mid-September to early January. However, if the market makes a substantial step below the 38.2% Fibonacci of 22202, the medium-term picture would consequently turn bearish, shifting focus to the 50% Fibonacci of 21593.
In the alternative scenario, a move higher would see the 20-day SMA at 23713 which acted as a significant base in the past. Steeper upside extensions could bring the previous top at 24166 into view, with scope to test the 25000 psychological level.
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