The Nikkei Index Has Risen To a Two-Month High
![The Nikkei Index Has Risen To a Two-Month High](https://fxopen.com/blog/en/content/images/2024/07/nikkei.png)
As we reported on 26th June, analysing the Nikkei 225 chart (Japan 225 on FXOpen):
The price is in a significant upward trend (shown by the blue channel);
The price may continue to rise along the median line.
Since then, the Nikkei 225 index (Japan 225 on FXOpen) has increased by more than 6%, reaching a yearly high on 10th July above 42,500 points. The price particularly surged on 9-10 July, breaking resistance at 41,160 (formed from the previous peak at the end of March).
However, the bears made a strong comeback afterwards, pushing the price back to the 41,160 level. Thus:
Completely offsetting the gains from 9-10 July;
Forming a bearish engulfing pattern spanning 4 candles;
Prompting consideration that the breakout above 41,160 was false (a trap for bulls).
According to Reuters, bearish drivers included technology stocks such as Tokyo Electron, which saw a more than 6% decline in one day, following sell-offs in US technology stocks (as reported on 12th July).
Sentiment in the Japanese stock market is also influenced by risks of interventions by the Bank of Japan to support the yen.
Technical analysis of the Nikkei 225 (Japan 225 on FXOpen) provides further insights:
The price is still in the upper half of a significant ascending channel (shown by the blue channel), originating in 2023;
There is no conclusive evidence yet that the price is consolidating below the 41,160 level.
However, it's possible that the bears could break below the median of the blue channel and consolidate below 41,160.
In that case, the bearish reversal from last week could become a key point in constructing an important descending channel for the Nikkei 225 index (Japan 225 on FXOpen), whose contours are already emerging (shown in red). Looking ahead to the second half of 2024, this suggests a potential break of the lower boundary of the blue channel.
Read more: https://fxopen.com/blog/en/oa-the-nikkei-index-has-risen-to-a-two-month-high/
Text source: Forex Trading Blog