Nikkei

Summary

Published 12th of June 2018 & validated 17th of July 2018 

The Nikkei 225 is likely to target a new 52 week high. The 25k-26k area could result into a fade of multiple time-frame trends. We expect that reversal to start a cyclical correction that lasts a couple of years.

Market Pulse

Published 17th of July 2018 

The updates further below remain valid. The Nikkei Elliott wave structure still lacks an impulsive structure for its swing from the early July low to the upside. Nevertheless, price action is showing momentum confirmation. Hence, a followthrough to the upside or transformation into an impulse is still possible.

The key takeaway remains that the downward sloping trend S/R from early 2018 high is a good guideline for a breakout to the upside. It should not get decisively broken unless minor wave 4 or minuette wave (ii) is still incomplete.

All in all, we are expecting a correction leading into the 21,600-22,000 area before the index resolves to the upside.

Published 13th of July 2018 

The Nikkei reached a trend resistance spanning to its early 2018 high. Price action advanced in a sharp 3-wave move slightly above this resistance.

We continue to assess higher odds to a resolution to the upside. Moreover, we expect to see a new high in 2018. However, the exact path is becoming increasingly complex. A few patterns are perfectly plausible at the moment. Two of them are displayed on our very first chart below.

A couple of trading related adjustments can be deducted from the current structure: The solid black downward sloping trendline can be used as a S/L guide. Moreover, the black scenario suggests a 3rd wave coming. Hence, we still need to see an impulse and subsequent pullbacks should be rather shallow.

Short-Term Nikkei Elliott Wave Analysis

Published 3rd of July 2018 

Risky assets are probably within a topping process. They continue to diverge with regard to failing to reach new highs. Some assets progress further to the downside during “risk-off” swings. Their respective cyclical high gets pushed further out of reach by this action.

Japanese equities have probably not seen their cyclical high yet. We are still missing the 5th wave and continue to argue that the Nikkei 225 is likely to target a new 52 week high during the second half of 2018. The 25k-26k area could form a potential target for the cycle high. The Nikkei shows a clear 3-wave drop from the 2018 high. It counts as a complete double zig-zag pattern into March 2018. It fits the simple 2nd wave by alternating as a complex pattern. The bears’ only possibility at this point remains a leading diagonal from the January 2018 top. That is something but far less convincing than an impulse from that 2018 high. Evidence suggests that a cycle high is ahead of us.

To complicate matters further, the Nikkei could also show some triangle pattern as part of a double-three combination. This would fit the picture on the US American indices, which also run at high odds of an incomplete sideways correction as we publish this.

All in all, we continue to forecast that the Nikkei exceeds at least the 23k mark to the upside during the next few months.

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