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Nikkei Forecast November 26, 2015, Technical Analysis

By:
Christopher Lewis
Published: Nov 26, 2015, 05:17 UTC

The Nikkei fell slightly during the course of the session on Wednesday, testing the ¥19,750 level for support. We did bounce a little bit from there so it

Nikkei Forecast November 26, 2015, Technical Analysis

The Nikkei fell slightly during the course of the session on Wednesday, testing the ¥19,750 level for support. We did bounce a little bit from there so it appears that the market will probably continue to find buyers every time we pullback. That’s been our thesis so far, and so far it’s worked. We believe that this market will try to reach the ¥20,000 level next, and eventually break above there offering longer-term buying opportunities. We have no interest in selling the Nikkei, the Bank of Japan is working feverishly to bring down the value of the Yen in general anyway, which of course is a positive for exporters. Keep in mind that the Nikkei 225 is chock-full of exporters, and as a result you always have to pay attention to the currency aspect of the index.

On top of that, you have a nice uptrend that we have been in for some time, and it has been rather impulsive. With this, it is very likely that the market will continue to find buyers. Above the ¥20,000 level, the area has been rather resistive. However, once we break above there we don’t see any struggle trying to get to the ¥20,800 level, and then quite a bit higher than that. Keep in mind that the Bank of Japan will more than likely extend its monetary policy, which of course continues to devalue the value of the Japanese yen. As long as that’s the case, Japanese exports become cheaper for Americans and Europeans to buy, and that of course brings up the value of companies exporting from Japan. That’s essentially what the Nikkei 225 is, a barometer of the exports Bank of Japan as internal demand has been so soft for decades, it’s almost an afterthought.

It is not until we break down well below the ¥2500 level that I would even consider selling this market as there seems to be a massive amount of support all the way to that area, with the ¥18,500 level being the “floor” of this market and the recent rally.

 

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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