Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Nikkei Japanese Stock Index Set To Get Smashed

Stock-Markets / Japanese Stock Market May 18, 2015 - 04:43 PM GMT

By: Austin_Galt

Stock-Markets

Of all the indexes I cover, there is no other stock market that I am more bearish about than the Japanese index, the Nikkei. But let’s be under no illusions. The massive bear market that has been in force since the 1989 top is done and dusted.

Let’s take a top down approach to the analysis beginning with the yearly chart.


NIKKEI YEARLY CHART

I have drawn a downtrend line across the 1999 and 2007 tops which shows price busting above this resistance level back in 2013. This was the first sign the bear trend may be over. Any pullback now should not break below this trend line.

The next sign that a new bull market was in play was price busting above the previous swing high being the 2007 top which is denoted by the horizontal line.

So, we have a higher high in place and all that is now required to confirm the new bull trend is for price to come back down and put in a higher low.

The Bollinger Bands show price has moved up to the upper band for the first time in over 25 years. Considering the power of the bear trend that has been in force I would think some consolidation is in order and hence I favour price to do some more work around the middle band before the bull trend really kicks into gear.

The PSAR indicator has a bullish bias after price busted the dots on the upside last year. Before the bull trend really unleashes, I expect price to come back to test the support given by the dots which are now on the downside. These dots are currently at 7553 and will be around 8000 next year.

The RSI showed a bullish divergence at the 2008 low and is now up in overbought territory so a pullback would certainly not surprise here.

The Stochastic and MACD indicators are both trending up and looking very bullish however their averages have started to diverge somewhat so a pullback would bring them back to normalcy before that continue higher.

So, the expectation now is for price to come back down and put in a higher low. Where is this higher low likely to be? Let’s go to the monthly chart to try and answer that.

NIKKEI MONTHLY CHART

We can see the horizontal line denoting the previous swing high and price recently busting above it indicating a new bull trend in play.

The Stochastic indicator shows a recent bearish crossover while the MACD indicator is still bullish but a bearish crossover certainly looks very possible shortly.

There looks to be the potential for a head and shoulders bottom to form. The 2003 low was the first shoulder while the 2008 low was the head. We now just require price to come back down and form the second shoulder.

I have added Fibonacci retracement levels of the move up from 2008 low to recent high. The first correction in a new bull market often makes a deep retracement and that is my expectation here. I favour a correction back to at least the 76.4% level at 10123 and even as low as the 88.6% level at 8506. Personally, I favour somewhere in between.

I have drawn a Fibonacci Fan from the 2008 low to recent high and I am targeting the final low to be at support given by the 88.6% angle. This looks set to occur in late 2016 just above the 88.6% retracement level.

Also, I am looking for this correction to be a measured move equalling the move down from the previous swing high in 2007 to the 2008 low which was 11306 points. Subtracting this amount from the recent high at 20252 gives a low target of 8946. That would mean a 55% correction.

NIKKEI WEEKLY CHART

The RSI shows a triple bearish divergence in its final run up into top.

The Stochastic indicator has had a bearish bias since the week after the top and that remains in forces despite the recent rally.

The PSAR indicator has a bearish bias with the dots above price. The dots currently stand at 20153 and I expect that resistance to hold.

I have drawn a Fibonacci Fan from the October 2014 low. This shows the recent run higher being generally contained between the 50% and 61.8% angles. On the way to the top price was challenging the 50% angle while it now appears to be challenging the 61.8% angle. I favour this 61.8% angle to give way shortly as price breaks lower.

Let’s wrap it up by looking in close at the daily chart.

NIKKEI DAILY CHART

The recent high at 20252 was accompanied by a quadruple bearish divergence on the RSI and a triple bearish divergence on the MACD indicator. This is bearish indeed.

I have drawn a horizontal line denoting the previous swing low level. We can see price has busted below this level thereby putting in a lower low. We now just await a lower high and the bear trend will be off and away.

Where is the lower high likely to be?

I have added Fibonacci retracement levels of the recent move down and, in line with the first bear rally in a new bear market making a deep retracement, I favour price rallying up to at least the 76.4% level at 20017 while the 88.6% level at 20138 may be a tad too high. Let’s see.

Summing up, I believe a massive new bull trend is in play now. However, a higher low will be needed to confirm that and it is my expectation now that price will get absolutely smashed to the order of over 50% as it searches for that higher low.

By Austin Galt

www.thevoodooanalyst.com 

Austin Galt is The Voodoo Analyst. I have studied charts for over 20 years and am currently a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts, there seemed to be a dearth of technical analysts. My aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Email - info@thevoodooanalyst.com 

My website is www.thevoodooanalyst.com 

© 2015 Copyright  The Voodoo Analyst - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Austin Galt Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in