Two Reasons To Sell The Nikkei

Posted Tuesday, April 18, 2017 by
Arslan Butt • 2 min read

Yesterday, the global stock markets were supported due to thin volatility as most of the markets were closed because of the Easter holidays. However this is not the case today. The markets are fully active and we can expect some major fluctuations today. The Japanese stock market index, the Nikkei, is trading mixed at $18400 in the Asian sessions. But, it seems as though it will fall soon due to the following two reasons:

 

2 Major Reasons For A Bearish Nikkei

Geopolitical Tensions

The United States is causing problems again. Since Trump was elected President, the U.S is constantly under watch and it never fails to provide us with breaking news.

This time, the U.S attacked ISIS in Afghanistan by dropping the biggest non–nuclear bomb, called the "mother of all bombs". This supposedly killed 94 members of ISIS who were hiding out under a tunnel. 

The second reason is the already present tensions between the US and North Korea. The US is insisting that North Korea completely stop developing their missile program. 

 

How does this impact the Nikkei?

News like this spooks stock market investors. Both these pieces of news boost war sentiments leading investors to try and withdraw their investments from the equities and look for safer investments such as Gold and Silver.

Nikkei - 4 Hourly ChartNikkei – 4 Hourly Chart

 

Technical Outlook

The 4-hours chart of the Nikkei demonstrates a bearish bias for the Index. We can see the prices are consistently holding below 50 periods EMA along with the RSI hold in a selling zone at 42.

In addition, we can also see a bearish engulfing candlestick formation on the 4-hour chart which represents a potential bearish reversal in the Index.

 

Forex Trading Signal

I have recommended a sell below $18400 with a stop loss above $18540 and a take profit at $18285. At the moment, our signal is in profit so it's highly recommended to move your stop loss to the breakeven area to avoid sudden changes in fundamentals.

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About the author

Arslan Butt is our Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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