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Nikkei Forecast October 29, 2014, Technical Analysis

By:
Christopher Lewis
Updated: Aug 25, 2015, 07:00 UTC

The Nikkei fell again during the session on Tuesday, but found enough support below to turn things back around and form a nice hammer for the second day

Nikkei Forecast October 29, 2014, Technical Analysis

The Nikkei fell again during the session on Tuesday, but found enough support below to turn things back around and form a nice hammer for the second day in a row. In fact, you could even possibly suggest that its three days in a row now after breaking the top of the shooting star as the Friday candle is in quite a hammer, but it is very similar. With that being the case, we feel that a break above the ¥15,400 level is in fact a decent opportunity to start buying this market as it has in the ¥16,000 level. We also believe that there is enough support of pressure below to continue to have people going long of the Nikkei.

Don’t forget, the Bank of Japan is certainly looking to boost the value of assets in Japan as the economy is so stagnant. They will continue to step into the marketplace and do what they can to devalue the Yen be it of the bond markets, and purchases in general. They have been known to step into the Nikkei and start buying ETF’s, so would not be a surprise if they did it again. We believe that the market should ultimately go higher based upon the fact that there is absolutely no return in the bond markets, and that the value of the Japanese yen should continue to deteriorate.

Watch the USD/JPY pair, as it most certainly will have an effect on this market. The higher it goes, and other words favoring the US dollar, the higher the Nikkei should go given enough time. Pullbacks should continue to offer buying opportunities because quite frankly we do not believe that the Bank of Japan will allow the Nikkei to fall very far, nor would it allow the US dollar to lose too much in the way of value against the Yet. With that, we essentially have a “central bank put” underneath the stock market as far as we can tell. We are buyers only, and do believe that ultimately the longer-term trend continues to go higher.

 

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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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