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Risky Sentiment & The Nikkei – Bullish Signal

Posted Tuesday, May 9, 2017 by
Arslan Butt • 1 min read

It's been a long time since I wrote anything about the Japanese stock market index as our recent focus remained on the hot trading instruments like Gold, WTI Crude Oil, and Forex. Having said that, we shared several trading signals on the Nikkei and gladly all of them closed in profit. Before talking about the fundamentals, let me share a forex trading signal in the Nikkei.

Forex Trading Signal

At the beginning of the European session, we shared an idea for buying the Nikkei above $19908 with a stop loss below $19850 and a take profit at $20000.

Fundamentally, the Japanese stocks rose due to investor's increased appetite for risky investments. This is apparent when investors sell out the low yielding securities (Bullion) to invest in the high yielding securities (stock markets).  

This risk-taking sentiment strengthened after the favorable French election results outcome on Sunday. Consequently, the S&P 500 and Nasdaq placed record intraday highs on Monday. Due to the strong positive correlation between U.S stocks and Japanese stock markets, the Nikkei index rose mildly.

Nikkei - Hourly OutlookNikkei – Hourly Outlook


The technical side of the index is very overbought. The RSI has crossed above 70, signaling that sooner or later the buyers will get exhausted. However, it's very common for the Nikkei to continue the trend while ignoring the momentum indicators.

At this moment, the index is holding above a major support level of $19900 and is likely to target $20000 in the New York session today. Buckle up for the ride!

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