Nikkei Pushes Higher – Risk On Sentiment Ruling - Forex News by FX Leaders

Nikkei Pushes Higher – Risk On Sentiment Ruling

Posted Thursday, June 1, 2017 by
Arslan Butt • 2 min read

The Japanese stock market index traded higher in the wake of gains in trading. Electrical machinery sectors and precision instruments pushed shares higher.

However, the Asian markets began trading with a "Risk On" sentiment and the Japanese stocks pushed higher due to the increased appetite for risky investments. That's what the risk on sentiment is. The investors sell out the low yielding securities (Bullion) to invest in the high yielding securities, such as stock markets.

As we explained earlier in our Forex Signals Brief for June 1st, investors kept an eye on the Ministry of Finance data which showed an increased capital flow into Japanese bonds last week. Though the higher investment in the bonds results in weakness in the currency, the exchange of money against the bonds increases the money supply in the market.

Eventually, the excessive money supply in the market helps the corporate sector grow rapidly. Hence, the growing company will earn more revenue and will distribute more dividends to the shareholders. Consequently, we have seen solid bullish waves in the Japanese stock market index Nikkei.

Forex Trading Signal

In the European session today, we recommended having a buy position above $19855, with a stop loss below $19800 and take profit at $19960.

Nikkei Hourly Chart - Double Top Pattern Nikkei Hourly Chart – Double Top Pattern 

Technical Outlook – Intraday

The 4-hours chart clearly shows the strong buying sentiment of investors. The Nikkei has broken above the significant double top resistance level of $19830, after which the road is clear for the next target level of $19960.

Additionally, the RSI and Stochastic have entered the overbought trading zone, demonstrating that buying may take profit now. But the bullish engulfing pattern on the 4- hour timeframe is strengthening the buying trend.

Traders, we may update this signal depending upon the upcoming market releases, thus keep visiting us for live market updates.

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About the author

Arslan Butt // 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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