JPN225 - CTS Trade & Using the CORRECT Cypher Pattern ToolWe have a nice little bearish CTS (Combined Technical Score) setup happening here on the JPN225 with price action currently trading at a previous level of structure resistance.
On the higher timeframe we already have a double top, with the RSI overbought & showing bearish divergence & on the lower timeframe we have the same setting up with the added bonus of an at market bearish Cypher pattern.
*We also take a look at why it's important to use the CORRECT pattern drawing tool when looking at Cypher patterns.
Please leave your questions & comments below & remember to show that rocket some LOVE!
Your Trading Coach - Akil
JPN225 trade ideas
Nikkei to stall at current swing high?NIK225 - 24h expiry
Although the bulls are in control, the stalling positive momentum indicates a turnaround is possible.
Price action looks to be forming a top.
A lower correction is expected.
Although the anticipated move lower is corrective, it does offer ample risk/reward today.
Further downside is expected although we prefer to sell into rallies close to the 33177 level.
We look to Sell at 33177 (stop at 33477)
Our profit targets will be 32427 and 32227
Resistance: 34014 / 35000 / 36110
Support: 32610 / 32200 / 31410
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Nikkei 225: Bearish Divergence at Bearish Butterfly PCZThere is Bearish Divergence on both the RSI and MACD at the PCZ of a Bearish Butterfly, and there will hardly be any support until we reach the 1.618 Fibonacci Extension down at 18627JPY, but from the looks of it, it will likely be a very fast drop followed by an even faster recovery, but in the meantime the JPY could gain some strength.
Nikkei to stem dip again?NIK225 - 24h expiry - We look to Buy at 32465 (stop at 32165)
Price action has continued to trend strongly lower and has stalled at the previous support near 32712.
A Doji style candle has been posted from the base.
Price action looks to be forming a bottom.
This is positive for sentiment and the uptrend has potential to return.
Preferred trade is to buy on dips.
Our profit targets will be 33215 and 33355
Resistance: 33205 / 34015 / 35000
Support: 32610 / 32200 / 31410
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JPY stock basket Reacts To US Dollar RallyThe past week has had plenty of developments for many financial instruments across all markets. COINBASE:BTCUSD has slid to the downside, Major US Indices have also see a decline. JPY 225, the major stock index in Japan has reacted quite aggressively to the movement of the US Dollar.
The JPY 225 index is one of the indices we have identified to be strongly inversely correlated to the dollar index. As can be seen in the chart (The US Dollar index chart is the grey line chart). The reason for this correlation is quite lengthy. But it largely has to do with the US being the biggest consumer of Japanese manufactured products.
That being said, we've seen the US Dollar index Break lengthy bearish trends this past week. And Subsequently, The JPY 225 has done the exact opposite. If we ought to trade the JPY 225, We would be looking for short positions. And as can be observed in the charts, those who trade chart patterns would identify Head and shoulder on the JPY 225- Signaling the beginning of a potentially strong bearish trend. The Market has also broken a bullish trendline channel which confirms a potential long-term reversal.
In order to track the movements of major instruments we will look at how the dollar index moves in the coming week. Since there are plenty of US news this coming week, We will see how the overall market responds to those and adjust accrdingly.
Share your thoughts and Let me know what you think about this analysis!
Until Next time.
Stocks Are Falling on the Background of the Activity of Central This week could be the worst for stock markets in 3 months after a series of interest rate hikes by central banks, writes Bloomberg.
The UK and Switzerland raised the rate by 0.25%. While the US Fed has left rates unchanged for now, Jerome Powell said another rate hike or two may be needed in 2023. Higher-than-expected inflation in Japan has also fueled speculation that the BOJ may adjust its super-loose monetary policy.
At the same time, an interesting situation is emerging on the Nikkei 225 chart. Having broken through the resistance line (1) in May, the Japanese stock index rushed up, attracting bullish speculators. Growth last week was particularly rapid, suggesting that the market is in the climax of the upward momentum. And the downward movement this week confirms this assumption. A bearish engulfing pattern may form on the Nikkei 225 chart, and, remarkably, if this happens, it will be at the border (2) of a large parallel channel, which begins in the first month of 2021. Thus, the area around 33,000 shows its strength as a resistance and can be used by the bears to build their trading campaigns.
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NIkkei 225 Short: Potential H&S SetupAs shown in the chart, it is possible that Nikkei 225 is going to see a fall to the support later today and continue falling through to reach the initial target of 32580.
A stop loss at 33808 and entry price at 33510 will give us a RRR of 930/298 = 3.12. Or a late entry will still be around 3 for the RRR.
Good luck!
JPN225: Ascending Channel UptrendThe JPN225 has been steadily advancing within the confines of an ascending chanel. This pattern suggests a series of higher highs and higher lows, reflecting consistent buying pressure and an overall bullish bias.
Within this ascending channel, a symmetrical triangle has formed. The triangle is characterized by a converging range of price action, as both the swing highs and swing lows gradually converge toward a breakout point. The narrowing range indicates decreasing volatility and potential pent-up momentum.
JPN225JPN225 (Nikkei 225) is showing a bullish flag pattern, RSI divergence, and a double top reversal pattern. Traders are advised to wait for a breakout below the last printed lower low point to consider a short trade, indicating a potential trend reversal in the market. Risk management is essential.
NI225 has closed positive for 9 consecutive weeks !NI225 has closed positive for 9 consecutive weeks !
Is it about to reverse?
This chart shows the weekly candle chart of the Nikkei Stock Index from the end of 2019 to the present. The graph overlays the line between the low point in 2020 and the low point in March 2023, the line between the low point in 2023 and the sub low point, as well as the horizontal line of the short start position in September 2021 and the horizontal line of the long start position in April 2023. As shown in the figure, the Nikkei Index has closed positive for 9 consecutive weeks and has exceeded its limit! In the next week, as the strongest Nikkei index in the near future, there is a high probability that it will lead the global stock index to retreat, probably by stepping back on the top diagonal line in the chart, and then choosing a direction!
NIKKEI INDEX BEARISH OUTLOOKNIKKEI Index, alongside most Asian stocks, dipped in the Thursday trading session, amid concerns regarding rising interest rates and slowing growth of the global economy.
The investors are still anxious to invest in risky assets before the Fed meeting, which will determine rather to hike the interest rates or hold. The analysts are divided on the issue due to mixed economic data.
The price chart had formed a bearish engulfing Wednesday and keeps the trend Thursday as well, failing with 0.2%. MACD and RSI indicators are still high, but the slow moving average of the RSI had crossed the overbought barrier from above, and the MACD histogram is declining.
If the trend continues, the price might target levels of 31648.81 and 31383.88. On the other hand, if it crosses the pivot point of 32178.67, it might test its resistance level at 32443.6.
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UPDATE Nikkei reached first target at 32,652W Formation formed on the Nikkei.
We then had a strong breakout with high inclination.
The price has since rocketed to our first target.
7>21>200
RSI>50
Target 32,652
It's still extremely bullish, but we can expect the price to come down consolidate in a range before we get the next buy signal.
I'll let you know.
NIKKEI Long - Wave v - Elliott WaveToday's price action, wave v does not seem to be completed yet.
As SQ is due next week, CALL should win again, big. If this is correct, wave v should be diagonal, 53535. Heading to 32000 area.
❗️This is a short time trade, 7 days max before SQ. I must close position if it breaks and stays below 30773, 78.6%, a typical diagonal retrace %.
Corporate governance reforms are working for JapanJapan1 is trading at a 33-year high, despite a challenging global macro backdrop. At 15x forward Price to Earnings (P/E) ratio, Japan has been trading at a valuation discount versus global peers, for a considerable period of time. We are finally starting to see a number of catalysts help narrow the wide valuation gap versus global peers – an improvement in corporate governance, rebound in domestic consumption post the pandemic, strong earnings results in FY3/23 and a weaker yen. This has led to a notable influx of overseas investor capital into Japanese stocks for 8 weeks in a row.
This rally was initially stoked by Warren Buffet publicly investing in Japan’s five leading trading companies. Berkshire Hathaway, Warren Buffets industrial and insurance conglomerate also said it intended to hold onto the investments for the long haul and could increase the size of its holdings to as much as 9.9%.
The Japanese equity rally has also been fuelled further by a combination of strong macro-economic data and solid earnings results which saw ¥5Trn in buyback announcements. On the macro front, the re-opening driven rebound in domestic demand is supporting the economy.
Recovery in Travel demand boosts business confidence
According to data on travel and tourism from the Japan Tourism Agency (JTA), spending on domestic travel reached ¥4.2Trn in Jan- March 2023, surpassing pre-pandemic levels slightly. The rapid recovery in inbound consumption is also a tailwind with the number of visitors to Japan in April back up to 73% of the 2019 average. Strong travel demand is supportive for business confidence. In tandem, the May services Purchasing Managers Index (PMI) reached its highest level since the survey began in 2007. This is consistent with trends in consumer sentiment evident from the May consumer confidence survey which showed an improvement in the consumer confidence index for the third month in a row2.
Rebound in domestic demand aids growth
According to preliminary estimates, GDP in Jan-Mar Calendar Year (CY)23 grew by 0.4% following two quarters of negative growth3. The main driver was private second demand, with consumption rising 0.6% and capex up 0.9% quarter on quarter (QoQ)3. Even public investment, which has been weak for a while, rose 2.4% QoQ contributing 0.1% to GDP growth. On the flipside external demand, highlighted in the export trade data, contracted 4.2%, dragging down headline GDP growth by 0.9%. While inbound spending, classified as services exports in the GDP statistics, increased 5.6% QoQ, goods exports contracted 6.5%3.
Fast forward through years of deflation, inflation is beginning to trend higher. Inflation triggered by structural labour shortages is forcing companies to raise wages meaningfully and re-think their pricing strategy. So, while the rest of the world is battling inflation fires, Japan is trying to ignite one. However, the most recent inflation print in May showed a surprising slowdown in Tokyo core price gains. Slower inflation is good news for households, which are spending more as the economy re-opens. It also gives further ammunition for the Bank of Japan (BOJ) to maintain its stance on ultra loose monetary policy.
BOJ governor Kazuo Ueda acknowledges that Japan’s economy continues to require significant stimulus to maintain a goal of stable demand-driven 2% inflation. Owing to which, we have seen the Japanese Yen decline 5.51%4 versus the US dollar. This in turn has made Japanese exports cheaper aiding Japanese export companies.
The myth that Japanese companies do not reward shareholders has been dispelled now
Japan’s Fiscal Year 31 March 2023 earnings season witnessed results that were resilient overall. What stood out was the large increase in the number of share buyback announcements ¥5Trn. This was not a consequence of profit growth alone but more likely a result of the changes of the Tokyo Stock Exchange’s (TSE) Price/Book (P/B) criteria as discussed here. Share buybacks have attracted foreign investors and is providing an important tailwind for Japanese equities.
Corporate governance reform has been a thematic in Japan for seven years. However, this time we are seeing reform make breakthroughs. We got early indications from the mini-March annual shareholder meeting that showed Japanese investors voting more actively at AGMs. The next major catalyst will be the June AGM season. In regard to the potential impact to the new TSE guidelines on Japanese companies, feedback initially was mixed. However, we have seen 15%+ moves on the day of reform announcements by Japanese companies which confirms the market is clearly rewarding companies that are being proactive.
Solid earnings results provide a tailwind for Japanese equities
Japan’s Fiscal Year 31 March 2023 earnings results were resilient highlighting sales growth 16.4% YoY and 2% in net profits YoY5. The sectors that guided for the highest earnings growth in Fiscal Year 31 March 2024 are the ones that benefit from lower materials prices, namely electric power & gas, pulp & paper, and glass & ceramics. The domestic demand-led sectors are posed to benefit from reopening and inbound tourism, including land transportation, retail, and financial. They also issued the next strongest earnings guidance.