Looking at our Nikkei 225 cash index, we can see that there is a huge battle going on between the bulls and the bears for either keeping the index in the positive territory for the year, or in the negative. Looking at our daily chart, the opening price for 2018 is marked at the 22717 hurdle (solid line). From the technical side, after Nikkei reversed from its October lows and moved higher, the Japanese index got back above its long-term upside support line drawn from the low of the 28th of August last year.
Even though we are seeing some weakness again, this could be a temporary appearance. The index could test the upside line again and if not broken, it could act as a good bouncing ground for Nikkei to push back up again and target the last week’s high at 22575, or even go all the way towards the 22945 barrier, marked by the high of the 17th of October. Such a move would automatically surpass the yearly opening price and place the Japanese index back into the positive territory.
Alternatively, if the index decides to break the aforementioned upside support line and shows a daily close below the 21500 obstacle, marked by the low of the 1st of November, this could spook the bulls and the bears might take the leading role. There is a good chance of seeing Nikkei 225 moving lower again and testing the 20980 zone, which was broken a couple of times, but the index was not able to close the day below that mark. If this time that zone is not as strong as previously, a break below could lead the index towards the next possible area of support at 20665, which held the price from moving lower on the 2nd and the 27th of March.
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