The Japanese stock market index Nikkei dropped lower when it opened and then briefly moved to -0.14%. The bearish momentum in Japanese stock markets is being caused by declining oil prices as well as a retracement in the US dollar.
The greenback slipped nearly 0.4% against the Japanese yen to 111.04. A stronger Yen always hurts the Nikkei,. The stronger yen is never on the agenda for the BOJ (Bank of Japan), Japan as an export-oriented economy, prefers a weaker Japanese Yen. But today, the earlier gains in the Yen demotivated investors to invest in stocks, due to lower profit concerns.
Forex Trading Signal – Idea
The idea is to have a buy position above $20080 with a stop loss below $20030, in order to target $20160.
Nikkei 4 -Hourly Chart – Double Bottom Pattern
Technical Outlook – Intraday
Technically, the Nikkei is trading bearish, potentially due to the profit taking.
- The price is holding below 50 periods EMA, which is the first bearish sign.
- On the hourly chart, the 14 periods RSI is holding just at 50 which is signifying investors' neutral sentiment regarding coming movement. However, as it has traveled upside from the selling region, it could be an indication of fresh buyers entering the market.
- The Nikkei has formed a double bottom pattern on the hourly timeframe, which is extending a solid support at $20060. Our 3rd point is completing the 2nd one, so we may see buying above this particular trading level.
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