Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Dividend Aristocrat Is Leading the 5G Revolution - 22nd July 19
What the World Doesn’t Need Now is Lower Interest Rates - 22nd July 19
My Biggest 'Fear' For Silver - 22nd July 19
Reasons to Buy Pre-Owned Luxury Car from a Certified Dealer - 22nd July 19
Stock Market Increasing Technical Weakness - 22nd July 19
What Could The Next Gold Rally Look Like? - 22nd July 19
Stock Markets Setting Up For A Volatility Explosion – Are You Ready? - 22nd July 19
Anatomy of an Impulse Move in Gold and Silver Precious Metals - 22nd July 19
What you Really need to Know about the Stock Market - 22nd July 19
Has Next UK Financial Crisis Just Started? Bank Accounts Being Frozen - 21st July 19
Silver to Continue Lagging Gold, Will Struggle to Overcome $17 - 21st July 19
What’s With all the Weird Weather?  - 21st July 19
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Nikkei Japanese Stock Index Set To Get Smashed

Stock-Markets / Japanese Stock Market May 18, 2015 - 04:43 PM GMT

By: Austin_Galt

Stock-Markets

Of all the indexes I cover, there is no other stock market that I am more bearish about than the Japanese index, the Nikkei. But let’s be under no illusions. The massive bear market that has been in force since the 1989 top is done and dusted.

Let’s take a top down approach to the analysis beginning with the yearly chart.


NIKKEI YEARLY CHART

I have drawn a downtrend line across the 1999 and 2007 tops which shows price busting above this resistance level back in 2013. This was the first sign the bear trend may be over. Any pullback now should not break below this trend line.

The next sign that a new bull market was in play was price busting above the previous swing high being the 2007 top which is denoted by the horizontal line.

So, we have a higher high in place and all that is now required to confirm the new bull trend is for price to come back down and put in a higher low.

The Bollinger Bands show price has moved up to the upper band for the first time in over 25 years. Considering the power of the bear trend that has been in force I would think some consolidation is in order and hence I favour price to do some more work around the middle band before the bull trend really kicks into gear.

The PSAR indicator has a bullish bias after price busted the dots on the upside last year. Before the bull trend really unleashes, I expect price to come back to test the support given by the dots which are now on the downside. These dots are currently at 7553 and will be around 8000 next year.

The RSI showed a bullish divergence at the 2008 low and is now up in overbought territory so a pullback would certainly not surprise here.

The Stochastic and MACD indicators are both trending up and looking very bullish however their averages have started to diverge somewhat so a pullback would bring them back to normalcy before that continue higher.

So, the expectation now is for price to come back down and put in a higher low. Where is this higher low likely to be? Let’s go to the monthly chart to try and answer that.

NIKKEI MONTHLY CHART

We can see the horizontal line denoting the previous swing high and price recently busting above it indicating a new bull trend in play.

The Stochastic indicator shows a recent bearish crossover while the MACD indicator is still bullish but a bearish crossover certainly looks very possible shortly.

There looks to be the potential for a head and shoulders bottom to form. The 2003 low was the first shoulder while the 2008 low was the head. We now just require price to come back down and form the second shoulder.

I have added Fibonacci retracement levels of the move up from 2008 low to recent high. The first correction in a new bull market often makes a deep retracement and that is my expectation here. I favour a correction back to at least the 76.4% level at 10123 and even as low as the 88.6% level at 8506. Personally, I favour somewhere in between.

I have drawn a Fibonacci Fan from the 2008 low to recent high and I am targeting the final low to be at support given by the 88.6% angle. This looks set to occur in late 2016 just above the 88.6% retracement level.

Also, I am looking for this correction to be a measured move equalling the move down from the previous swing high in 2007 to the 2008 low which was 11306 points. Subtracting this amount from the recent high at 20252 gives a low target of 8946. That would mean a 55% correction.

NIKKEI WEEKLY CHART

The RSI shows a triple bearish divergence in its final run up into top.

The Stochastic indicator has had a bearish bias since the week after the top and that remains in forces despite the recent rally.

The PSAR indicator has a bearish bias with the dots above price. The dots currently stand at 20153 and I expect that resistance to hold.

I have drawn a Fibonacci Fan from the October 2014 low. This shows the recent run higher being generally contained between the 50% and 61.8% angles. On the way to the top price was challenging the 50% angle while it now appears to be challenging the 61.8% angle. I favour this 61.8% angle to give way shortly as price breaks lower.

Let’s wrap it up by looking in close at the daily chart.

NIKKEI DAILY CHART

The recent high at 20252 was accompanied by a quadruple bearish divergence on the RSI and a triple bearish divergence on the MACD indicator. This is bearish indeed.

I have drawn a horizontal line denoting the previous swing low level. We can see price has busted below this level thereby putting in a lower low. We now just await a lower high and the bear trend will be off and away.

Where is the lower high likely to be?

I have added Fibonacci retracement levels of the recent move down and, in line with the first bear rally in a new bear market making a deep retracement, I favour price rallying up to at least the 76.4% level at 20017 while the 88.6% level at 20138 may be a tad too high. Let’s see.

Summing up, I believe a massive new bull trend is in play now. However, a higher low will be needed to confirm that and it is my expectation now that price will get absolutely smashed to the order of over 50% as it searches for that higher low.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Email - info@thevoodooanalyst.com 

My website is www.thevoodooanalyst.com 

© 2015 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules