NIKKEI Opens in the Green despite Geopolitical Woes – Hawkish BoJ
Japan expressed concerns over China’s military drills surrounding the island nation of Taiwan. Further worries of BoJ hawkishness seem to fade on this week’s open.
Japan’s Prime Minister Kishida expressed his concerns about the military drills to China’s Premier Li Qiang at a trilateral meeting with South Korea. The military drills conducted by China have raised tensions across the west as the US sees itself pulled into the conflict.
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Last week’s hawkish BoJ sentiment rippling through the market seems to have dwindled today as the NIKKEI225 is up 0.30%. Positive data from the Leading Economic Index at 112.2 up from 112.1, with forecasts at 111.4, helped garner some bullish sentiment.
Technical View
The NIKKEI225 day chart below shows the market is still in a consolidation phase after a correction from its all-time high. The market retraced back down to the bottom of the cloud, marking its recent low
Since then, the market has been hovering around the bottom of the cloud creating an upward sloping rectangle. This pattern is a consolidation pattern which usually leads to further downward price action.
However, it has formed on the cloud which also acts as a support area. Today’s candle bounced off the bottom of the cloud and looks set to close green. The current price level is struggling to clear the resistance from a previous high in February (green line).
If the market does clear the resistance, then the next resistance level is a previous high of 39,987 set on April 12 (blue line). To the downside, we would need to see a break of the sloping rectangle, which could lead to further lows.
The next support level would be at 36,703 (black line), which was the low set in the large bull trend correction on April 19. For the bullish trend to continue we need to see a break above the ATH of 41,224.
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