Nikkei 225 continues to trade above its medium-term upwards moving trendline, taken from the low of the 23rd of March. After dropping towards that trendline on the 7th of September and then bouncing off of it, it looks like the index is heading for a possible test of the 23050 resistance zone, which held the Japanese index from moving higher from the end of May and still continues to do that. For now, we will remain somewhat positive from the short-term perspective and if we see a close above 23050, then we will start examining much higher levels for the near term.
As we can see, the Nikkei 225 is trying to make its way higher, where a break and close above 23050 could interest more bulls to start joining in and they could stay in control there at least for a bit longer. The next potential area of resistance could be seen near the 23500 level, marked by the high of the 1st of February. Further acceleration of the price could send the index towards the 23790 zone, which was the high of the 29th of January. If that zone is not able to withhold Nikkei from rising further, a break of it could send the Japanese index all the way to the all-time high level at 24189, achieved on the 23rd of January.
Alternatively, for us to start examining the downside, we would need to see a clear break and a close below the aforementioned medium-term upwards moving trendline. A further break below the 22160 hurdle could interest more bears to jump in and drive the index lower towards the 21825 barrier, marked by the low of the 13th of August. Slightly below lies another good potential area of support at 21740, which held the price from dropping lower on the 11th of July. If the bears remain in the driver’s seat, Nikkei 225 could fall all the way to the 21450, which was the lowest point seen in July. This is the area where the Japanese index could meet the long-term upside support line, drawn from the low of the 28th of August last year.
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