Nikkei

Summary

Published 12th of June 2018 & validated 14th August 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.

Short-Term Nikkei Elliott Wave Analysis

Published 3rd of July 2018 & amended 14th August 2018 (last paragraph and chart)

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-25.5k 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.

The Nikkei Elliott wave pattern fits a fourth wave triangle best as we publish this. The Japanese index spiked into another brief low yesterday. The selloff was sharp and broad-based based along all major indices worldwide. We have now a beautiful e-wave, which could complete the entire triangle pattern. The lower support of the contracting triangle can be used as a guideline whether the pattern is complete or extends further. The support should hold and prices should not progress below it if the fourth wave is complete already. All in all, we expect to see a retest to the downside as part of a second wave action before prices depart to the upside.

 

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