Nikkei Completes 38.2% Retracement – Buyers Looming Ahead!

Arslan Butt•Tuesday, June 6, 2017•2 min read

The Japanese Stock Market Index fell dramatically just like the other global stocks around the globe. The reasons included the increased geopolitical tensions, particularly related to the Middle East and U.K. Snap elections. The reasons are discussed in more detail in our earlier update Bullish Channel, Global Uncertainties & Gold – Get Ready To Trade!

In addition to this, the economic figures released by Japan in the Asian sessions added fuel to the fire. Japan's real wages remained flat in the month of April, compared to the same period in a previous year. The Nikkei dropped dramatically due to strengthening Yen.

Today, the Japanese Yen rose against the dollar following Japan’s labor cash earnings, which reported a four-month high. Higher inflation is a good sign for the economy and it develops the sentiment that the BOJ may increase the interest rates in the future. The increased interest rates lead to an increased cost of borrowing lower dividends. Consequently, the investors switched to safe assets, specifically the gold.

Forex Trading Signal – Idea

Considering the fundamentals and technicals, I'm looking to add a buy position above $19835, with a stop loss below $19750 and a take profit of $19950. Keep checking for updated forex trading signals.

Nikkei – 4-Hour Chart

Technical Outlook – Intraday

The Japanese Index was trading heavily in the overbought region. Looking at the 4-hour chart, we can see consolidation in the narrow range of $20000 – $20225.

For now, the Nikkei is trading lower to complete the retracement and it has already completed 38.2% Fibonacci retracement at $19985 in the 4-hour chart. If we look at the big bearish candles, it seems like 38.2% retracement is not enough, and the index is likely to go for the 61.8% retracement. That's where I'm looking to enter the market.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.