Japan 225 (Nikkei 225) Sees a Steep Dive Despite Economic Buoyancy

Japan’s economic indicator, the Coincident Economic Index, has shown that the country is performing well. Additionally, there are speculations that Japan will experience GDP growth. However, this optimism has not been reflected in the Nikkei 225, as futures prices dipped significantly during Friday’s trading session. Let’s analyze what market participants can anticipate in this market.

Key Price Levels:

Resistance Levels: 38,500, 39,000, 39,500

Support Levels: 38,000, 37,500, 37,000

Japan 225 Breaches the 38,450 Baseline

Price action in the Nikkei 225 market on the daily timeframe has broken through the 38,450 support level. Consequently, this market has started trading below all the Moving Average (MA) lines on the chart.

Meanwhile, the Stochastic Relative Strength Index (RSI) lines continue to decline deeper into the oversold region, with the lead line already falling below the 20-threshold level. Summarizing the technical signals from this chart, it appears that bearish momentum remains dominant, likely leading to further price declines.

Nikkei 225 Has a Short-Term Bearish Outlook

Friday’s trading session ended with bears firmly in control. Moreover, downward momentum remains strong, as price action has fallen below all MA lines. Similarly, the Stochastic RSI lines are sharply declining into the oversold region.

However, upon closer examination of the Stochastic RSI movement relative to price action, it appears that the indicator is dropping too quickly. This suggests that the market may not fall much further before an upside rebound occurs. Therefore, market participants can anticipate a potential rebound around the 38,000 price level.

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