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Nikkei 225 Forecast: Potential Upward Pressures

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • The Japanese index has rallied a bit during the trading session on Monday, as we have seen the Japanese yen lose some of its strength.
  • That being said, this is a market that I think could go looking to the 40,350 yen level, an area that I think is the gateway to much higher pricing.
  • We had pulled back rather drastically at one point only to turn around and show signs of life.

The 200 day EMA has been a longer term support level for quite some time and therefore I think it makes sense that we see this market bounce and perhaps challenge that resistance barrier. If we can break above the 40,350 yen level, then I think the 42,000 yen level will be targeted. Keep in mind that the Japanese yen falling does help the Nikkei 225 mainly due to the fact that the majority, if not all, of the index companies in Tokyo are heavily export laden. In other words, it comes down to whether or not Japanese goods are cheaper in other parts of the world.

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The Exporters are the Bulk of the Japanese Economy

Nikkei Forecast Today 12/11: Upward Pressures (graph)

As long as that's going to be the case, then it helps those companies and therefore we see this market rally. It's really not until we break down below the 37,250 yen level that I would be concerned about this index. With this being the case, I think you've got a lot of volatility, but I think ultimately, you've got a lot of buying pressure on each and every dip that we have seen come back into this market time and time again. I think that will continue to be the case for the Nikkei 225 in Tokyo, as well as many other indices around the world. After all, most of the indices around the world move in a “risk on/risk off” type of behavior, quite often influencing each other along the way. The Nikkei 225 is no different.

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Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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