Nikkei 225 Forecast: Tokyo Electron Strength Drives Market Rebound

Nikkei 225 rebounds from the key support of 63,700 on Wednesday. This rebound is led by the real estate, banking and textile stocks. The rally did not happen in just one corner of the market. This rebound was broad based across the board. The Tokyo Stock Exchange also had more advancing stocks than declining stocks, which indicates positive market breadth.

Electronics and manufacturing companies provided the biggest boost. Taiyo Yuden surged over 20% to hit a new high. Murata Manufacturing and Panasonic also posted big gains.

The surge indicates that investors continue to buy the quality Japanese technology and industrial stocks despite the volatility in the market. The Nikkei 225 tends to get more support when big technology and manufacturing stocks are on the uptrend. These companies carry significant market influence. But weakness in the mining and metal stocks also indicates that not all sectors participated in the rally.

Yokogawa Electric Corp, Furukawa Electric Co Ltd. and Kanadevia Corporation continue to decline from their peaks in May 2026. This drop is considered a correction after profit-taking, and they should find strong support to rally further. Once these stocks also find support, the rally in the Nikkei 225 will likely strengthen.

On the other hand, Ibiden Co. Ltd. and Mitsui Kenzoku Co. Ltd. also continue to drop after their peaks in May 2026.

Tokyo Electron Rally Supports Japan’s Tech Momentum

Despite this, Tokyo Electron continues to set new records. The chart shows that Tokyo Electron gained 8.91% on Tuesday and the stock has already gained 6% since the opening on Wednesday within the first few hours.

This surge comes after the support level of 54,000 which indicates strong bullish momentum in Tokyo Electron due to the formation of the cup pattern in the chart below.

Nikkei 225 Technical Analysis: 63,700 Support Remains Key

The daily chart for Nikkei 225 shows a strong rebound from the 63,700 support level, as discussed in the previous article. This rebound looks constructive as the drop on Tuesday formed a low at 63,106.

A recovery above 66,200 will indicate further upside towards the record high. However, a break below 63,700 will likely indicate further downside towards the 60,000-62,000 level.

The important support of 63,700 was discussed in the previous analysis. The resistance of May could have been the support of June.

The formation of a cup pattern above 50,000 and then the formation of a V-shaped recovery above 60,000 indicate bullish momentum in Nikkei 225.

The recent drop in Nikkei 225 developed after the formation of the divergence pattern at the top, but the support at 63,700 may introduce the next rally.

Bottom Line

The Nikkei 225 holds key support at 63,700 and traders are still buying back into the index. The widespread market participation also bolsters the momentum, and continued improvements in technology, electronics and manufacturing stocks continue to drive the index. Tokyo Electron’s improved performance also keeps the bull market alive.

But the mining, metals and some industrial companies are not even in equilibrium yet, as evidenced by their weakness. Any move above 66,200 will pave the way for a retest of the record high, while a move below 63,700 will provide momentum back to the 60,000-62,000 support area. As long as buyers hold the existing support level, the Nikkei 225 is positive for now.

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