Nikkei Starts June with a Major Sell Signal
The second half of June brought us a huge drop in the global stock markets. On many indices, that decline allowed to create legitimate sell signals. One of the examples is the Japanese Nikkei, which actually got a new fresh sell signal tonight.
Let us start with the general description. First of all, we are inside of the long-term symmetric triangle pattern (black lines). Most recently, we bounced from the upper line of this formation and went lower. The first session in July brought us a huge drop, which broke an important support on the 22000 points (upper green). In my opinion, that sorts out the bearish sentiment for the next few days. With this setup, we should easily reach the lower line of the triangle soon.
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Drop towards the lower black line is our base scenario for now but what will happen next is still unknown. A bounce from this line will switch on the positive sentiment with a target on the upper black line. A breakout will open us away towards the support of the 20300 points (lower green). Do not worry no though, we will try to update our view, once we will reach the target from this analysis as mentioned in the previous paragraph.
This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis