Technical Analysis – Japan 225 index stalls ahead of 14-month peak of 24,162

Anthony Charalambous, XM Investment Research Desk

Japan 225 stock index (cash) has run out of fuel in its second attempt to overtake the 24,162 level. The recent stall in the up move can also be seen in the flattening of the Bollinger bands and the RSI, which is in the bullish territory.

The short-term oscillators reflect mixed signals of momentum while the simple moving averages (SMAs) lean towards an improving picture. The MACD is rising above its red trigger line in the positive zone, while the Stochastics – although in overbought territory – demonstrate some weakness to the upside.

Ascending, buyers would initially need to overcome a fortified resistance involving the fourteen-month high of 24,162 and the residing upper-Bollinger band. Conquering this, the 2018 high of 24,472 could deny further gains towards the 24,630 and 24,914 resistances, which happen to be the 138.2% and 161.8% Fibonacci extensions of the retracement of 24,162 to 22,938 respectively.

If sellers push below 23,800 and mid-band at 23,730, the 50-day SMA could apply some friction ahead of the lower-Bollinger band at 23,242. Diving down, the lows of 22,938 and 22,895 could impede the price from testing a key area from 22,722 to 22,656 where the 100-day SMA also lies. Next, the region of 22,486 to 22,405 and the support of 22,252, if surpassed, could throw into question the bigger positive picture.

Summarizing, a neutral-to-bullish bias exists in the short- and medium-term, with a break of 24,162 reviving the ascent.