Published 13th March 2018 & validated 16th, March 2018

The Nikkei 225 appears to build a bottom inside a cluster of long-term support/resistance. Odds favor at least a rebound to higher levels if the Japanese index fails to reach a new 52 week high.

Short-Term Nikkei Elliott Wave Analysis

Published March 16th, 2018

The Nikkei traced out only 3 waves to the upside from its March 2018 bottom. We have highlighted this with the fat red lines. The index tries to build a base above the levels, which we cited in our last update below. We remain with our black count base case as not enough wave pattern. The information from the last update remains fully valid. It’s up to the bulls to score a goal at this point!

Published March 13th, 2018

We see tailwinds from global equities, which should also lift the Nikkei. Risk inclination among investors as well as momentum is on the rise as we publish this update.

Our base case scenario remains another 52 week high, which is reached from a complex sideways correction. We count the Nikkei’s drop off its January 2018 highs as a 3-wave move in this scenario. It divides into a zig-zag, which is followed by a flat. It is important that the market does not spend much time below the pale green as well as inside the blue support/resistance areas for this scenario to play out.

The risk that the downside swing morphs into a 5-wave impulse remains on the table. However, we assess a higher rebound from current levels also as likely for the bearish scenario. The persisting problem about a 5-wave move from the top is that it signals more downside. This further leads to a projection, which will take out big support and resistance in the Nikkei.

It ultimately results in an irregular flat of primary degree. Another five wave followthrough to the downside of the wave, which we’ve just witnessed since January, will most likely reach into minor wave 1. This action invalidates Elliott’s rules. It leaves us with a January 2018 top in 3-waves combined with a very short looking primary wave 2(circle). Hence, a big degree irregular flat pattern is probably forming. This is depicted by our red price paths.

Mid Term Nikkei Elliott Wave Analysis

Published 14th February 2018 

The big question is if primary wave completed in 2016. The alternative interpretation is an irregular flat scenario. It will become the preferred scenario if the Nikkei fails to take out it’s January 2018 high and the drop off this high morphs into a 5-wave impulse.

Long-Term Nikkei Elliott Wave Analysis

Published 14th February 2018 

The Nikkei finished a 20-year bear market in 2009. It traced out a complex Elliott wave pattern of cycle degree during this 20-year period. Moreover, some intermediate degree sub-waves traced out complex patterns as well.

We forecast that a secular bull market started in Japan in 2009. The increase into 2015 occurred with an impulsive character. It told us that there is more to come on the upside. A cluster of long-term resistance has been passed right after the Japanese elections in 2017. That area is a big thing from a technical point of view. There have been 7 instances in the past 30 years, which resulted in a multiyear rebound once that cluster had been reached. It forms as support to the Nikkei today.

The market is likely to continue playing with this major area of support and resistance. This is also highlighted by our preferred and alternative scenarios on the very last chart on this page.

Technical Analysis