Nikkei 225 Forecast: Tokyo Electron Rally Offsets SoftBank Losses

Nikkei 225 dropped on Thursday due to broad selling pressure. The losses were due to lagging performance across paper and pulp, transport and communication stocks. It was not just one sector that was negatively affected. The number of falling stocks on the Tokyo Stock Exchange outnumbered the rising stocks, which reflects caution by investors in the broader market. The heaviest losses came from the SoftBank Group, which fell by over 11%. Ibiden and Toppan Printing also lost over 10%.

But semiconductor and industrial stocks were strong, which offset some of the losses. Both Disco and Tokyo Electron surged higher. Tokyo Electron set a new all-time high. This demonstrates that investors remain bullish on Japan’s AI and semiconductor theme even on a poor market day.

Moreover, the weakness in oil market also impacted the Nikkei 225 as Japan is vulnerable to energy imports. But the quick decline in stocks such as SoftBank and the lack of breadth indicate that the Nikkei will likely require additional support from tech stocks, Wall Street rallies and the stable yen to get back on a positive trajectory.

Nikkei 225 Correction Sets Up Next Surge

The short term outlook for the Nikkei 225 shows that the index has corrected toward the support line near 67,000. The index is now consolidating in search of support.

A break below 67,000 will push the index toward 66,200 where the previous V-shaped pattern occurred. Once this correction is over, the index will likely trend higher. But the more important support remains at 63,800, which marks the short term support.

The chart below shows that the Nikkei 225 remains strongly bullish since the lows of the 50,000 level on 30 March 2026. The price has been compressing within tight ranges during this two month rally. But the strong resistance of 67,000-68,000 was reached on 3 June 2026, and it produced a key reversal candle. This key reversal does confirm the correction as the daily close was above 65,000. But the short term trend remains overextended.

The monthly chart shows that the Nikkei 225 continues to surge higher on the AI boom. If the Nikkei 225 drops sharply from the recent highs, then 60,000 remains strong support in the short term.

Tokyo Electron Rally Supports Nikkei 225

Many semiconductor stocks remain strong on Thursday. The chart below shows that Advantest Corp. and Tokyo Electron were strong performers on Thursday.

Tokyo Electron gained one of the strongest gains during the last two days. The formation of a rounding cup pattern from 26 February 2026 to 20 April 2026 and then the breakout above 47,000 indicates that Tokyo Electron remains in a surge mode.

The long-term outlook for Tokyo Electron shows that the price is now entering the overextension zone above 57,000 as seen in the chart below. It shows that Tokyo Electron remains in a parabolic move since the lows of March 2020 and is now trading within ascending broadening wedge.

The ascending broadening wedge pattern highlights strong volatility, whereby the breakout in June 2026 has taken the stock toward the overextension zone.

Tokyo Electron gained 19.23% in April 2026 and 18.09% in May 2026. But the stock has already gained 21.44% in the past three days of June which has pushed the stock into the overextension zone.

These extremely high gains during the parabolic move suggest that if the stock finds resistance, then the correction might be stronger.

Bottom Line

The Nikkei 225 remains in a bull market, but the sell-off on Thursday suggests profit taking. The short-term direction of the Nikkei 225 remains uncertain due to the overall market weakness and the big losses in SoftBank. But the AI theme is driving Japan’s market, as evidenced by the strength of the semiconductor stocks. The primary support of this correction is between the 60,000 and 63,800 levels. Tokyo Electron is also a major contributor to the rally but entered into the overextended zone as well. Any correction in Tokyo Electron might introduce significant volatility in Nikkei 225 as the stock trades in a parabolic move.

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