Nikkei

Summary

Published 13th March 2018 & validated 18th, May 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.

Market Pulse

Updated May 18th, 2018 

The trend is up but the Nikkei Elliott wave structure is ripe for a small correction. Japanese stocks have been resilient lately. We cannot rule out further upside extension before the pullback comes. Momentum indicators are not sending clear signals either way. An upside extension is likely if recent strength peaks get exceeded. Near-term supports are around 22,500 and at 22,000 points.

All in all, the path of least resistance remains most likely the upside despite probable setbacks.

Short-Term Nikkei Elliott Wave Analysis

Updated May 8th, 2018 & amended May 15th, 2018

We see a clear 3-wave drop from the 2018 high. Moreover, the drop counts as a complete double zig-zag pattern into March 2018. It fits the simple 2nd wave by alternating as a complex pattern. The blue horizontal cluster of long-term support did its job. It attracted the drop and held firm. Last but not least, most major indices worldwide look rather bullish for the remainder of Q2. That’s a bunch of evidence for the bullish case.

Elliott’s guidelines suggest extended third waves after a leading diagonal. That’s what we’re expecting now! A -2% correction should more or less hold inside the mint trend channel. It will be probably a good risk/reward trading opportunity in Japanese equities.

The bears’ only possibility at this point remains a leading diagonal from the January 2018 top. That’s a lower odds possibility at this stage at this stage. The red case for an irregular flat B-wave top in 2018 remains possible but unlikely. Diagonals retrace big proportions during their corrective waves.

All in all, we expect higher levels than today.

Mid Term Nikkei Elliott Wave Analysis

Published 14th February 2018 

The big question is if primary wave 2 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 motive wave.

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