Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20
Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
From Trump’s TikTok Mess to US Tech Cold War against China - 7th Sep 20
The Federal Reserve vs. Judy Shelton And Gold - 7th Sep 20
Fed Dials Up Inflation Target…Own Gold - 7th Sep 20
Does Gold Still Have Plenty of Potential? - 7th Sep 20
CDC Shock Admission - THERE IS NO PANDEMIC! Over 90% of Deaths NOT From COVID19 - 7th Sep 20
Stock Market SPX to Gold/Silver Ratios Explored – What To Expect Next - 7th Sep 20
Is the Precious Metals Market really Overwhelmed and Chaotic - 7th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

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