XM Group - Analytics

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    Technical Analysis – Japanese stock index consolidating after 15-year highs

    Following a 15-year high on 23rd June, the Japanese stock index has given back some of those gains; correcting as much as 9% in the following 2 weeks.  The closing high on 23/6 was 20874.

    An attempt to make new highs on July 21/22 failed and the index has turned back into the Ichimoku cloud.  The Tenkan-sen line is still above the Kijun-sen, which is bullish.

    The overall trend is bullish and it is worth noting that Japanese equities have been one of the strongest performing asset classes in the word during 2015 – up by 16.5% year-to-date.

    Should the index fall below 19850-19900 (Senkou Span B – the bottom of the cloud), it could signal more bearishness.  Even more downside could be triggered by a fresh low below 19000 that could signal a 10% correction from the highs.

    If price action climbs above the 20300 upper cloud on the other hand, fresh longs could be established.  Fresh multi-year highs above 20900 would also confirm the bullish prospects.

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