Nikkei 225 Technical: Potential major bullish breakout after pull-back – heochaua

<p><a href="https://api.addthis.com/oexchange/0.8/forward/facebook/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Findices%2Fnikkei-225-technical-potential-major-bullish-breakout-after-pull-back%2Fkwong&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/facebook.png" border="0" alt="Facebook" /></a><a href="https://api.addthis.com/oexchange/0.8/forward/twitter/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Findices%2Fnikkei-225-technical-potential-major-bullish-breakout-after-pull-back%2Fkwong&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/twitter.png" border="0" alt="Twitter" /></a><a href="https://api.addthis.com/oexchange/0.8/forward/email/offer?url=https%3A%2F%2Fwww.marketpulse.com%2Findices%2Fnikkei-225-technical-potential-major-bullish-breakout-after-pull-back%2Fkwong&amp;pubid=ra-525512e4690e068c&amp;title=Marketpulse%20%7C%20Home&amp;ct=1" target="_blank"><img src="https://cache.addthiscdn.com/icons/v3/thumbs/32×32/email.png" border="0" alt="Email" /></a></p><ul>
<li><strong>Yesterday’s swift rally has led to an overstretched upside momentum condition.</strong></li>
<li><strong>At the risk of a minor corrective pull-back within its short-term uptrend phase.</strong></li>
<li><strong>Watch the 33,150 key short-term support.</strong></li>
</ul>
<p>This is a follow-up analysis of our prior report,<em> “Nikkei 225: Bulls undeterred by Japanese government economic downgrade” </em>published on 23 November 2023. Click <a href="https://marketpulse.com/indices/nikkei-225-bulls-undeterred-by-japanese-government-economic-downgrade/kwong">here</a> for a recap.</p>
<p>The price actions of the <a href="https://www.oanda.com/sg-en/trading/indices/">Japan 225 Index</a> (proxy of the Nikkei 225 futures) have managed to hold above the 32,090 key medium-term support as highlighted in our previous analysis (printed an intraday low of 32,164 on 8 December 2023 before it reversed up by +5.2% to retest its 33 -year high which is the medium-term range resistance of 33,770/825 in place since 16 June 2023.</p>
<p><strong>At a 33-year high with a positive medium-term momentum condition</strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/12/NI225_2023-12-20_15-43-01.png"><img loading="lazy" class="alignnone wp-image-809156 size-large" src="https://www.marketpulse.com/wp-content/uploads/2023/12/NI225_2023-12-20_15-43-01-1024×584.png" alt="" width="700" height="399" srcset="https://www.marketpulse.com/wp-content/uploads/2023/12/NI225_2023-12-20_15-43-01-1024×584.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/12/NI225_2023-12-20_15-43-01-300×171.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/12/NI225_2023-12-20_15-43-01-768×438.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/12/NI225_2023-12-20_15-43-01.png 1508w" sizes="(max-width: 700px) 100vw, 700px" /></a></p>
<p>Fig 1: Nikkei 225 major & medium-term trends as of 20 Dec 2023 (Source: TradingView, click to enlarge chart)</p>
<p>This “stubborn level” of 33,770/825 has created a barrier for the bulls thrice on 3 July, 15 September, and 20 November. Hence, right now it will be the fourth test on this barrier today, 20 December at this time of writing.</p>
<p>So, will it be another failure or a bullish breakthrough? The latest reading seen in the medium-term daily RSI momentum indicator has advocated for a potential bullish breakout scenario above 33,770/825.</p>
<p>The daily RSI has managed to stage a rebound after a retest at a parallel pull-back support at the 43 level and has yet to reach its overbought region. These observations suggest that medium-term upside momentum has resurfaced without being overstretched.</p>
<p><strong>Minor corrective pull-back in progress </strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/12/JP225YJPY_2023-12-20_15-57-33.png"><img loading="lazy" class="alignnone wp-image-809157 size-large" src="https://www.marketpulse.com/wp-content/uploads/2023/12/JP225YJPY_2023-12-20_15-57-33-1024×584.png" alt="" width="700" height="399" srcset="https://www.marketpulse.com/wp-content/uploads/2023/12/JP225YJPY_2023-12-20_15-57-33-1024×584.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/12/JP225YJPY_2023-12-20_15-57-33-300×171.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/12/JP225YJPY_2023-12-20_15-57-33-768×438.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/12/JP225YJPY_2023-12-20_15-57-33.png 1508w" sizes="(max-width: 700px) 100vw, 700px" /></a></p>
<p>Fig 2: Japan 225 minor short-term trend as of 20 Dec 2023 (Source: TradingView, click to enlarge chart)</p>
<p>Through the lens of technical analysis, price actions do not move in a vertical direction but instead oscillate within trends. The Index has evolved into a short-term uptrend phase from its 8 December 2023 low of 32,164 as price actions surpassed the 20-day moving average.</p>
<p>A point to note that is the rally seen yesterday, 9 December has been reinforced by the Bank of Japan’s monetary policy forward guidance that offered no clear indication of an imminent removal of its short-term negative interest rate policy.</p>
<p>This set of short-term bullish impulsive sequence has been swift which in turn led to an overstretched upside momentum condition as the hourly RSI momentum indicator has just flashed a bearish divergence condition as its overbought region.</p>
<p>Hence, the Index may undergo a minor corrective pull-back at this juncture within its short-term uptrend phase toward the near-term support at 33,350.</p>
<p>If the 33,150 key short-term pivotal support (also the 20-day moving average) manages to hold, the Index may see another probe at 33,825 and above it sees the next intermediate resistance coming in at 34,200 in the first step.</p>
<p>However, a break below 33,150 negates the bullish tone to expose the next immediate supports at 32,840 and 32,560 (50-day moving average).</p>