Navigating the Nikkei 225: A Pivotal Moment for Traders

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Navigating the Nikkei 225: Key Technical Indicators Suggest a Pivotal Moment for Traders


By Eric Lee, Sales Director of Phillip Nova

The Nikkei 225 index is currently at an inflection point, with several technical indicators pointing to a tug-of-war between buyers and sellers.

Technical Indicators to watch out for:
1. GBP/JPY:

• The GBP/JPY currency pair had shown strong correlation to Nikkei225. Given the range-bound nature of both GBP/JPY and Nikkei 225 since August 14, 2024, a breakout in either could signal a similar move in the other.
  

2. Volume Profile Analysis:

• The volume profile indicator for the Nikkei 225 had suggested a resistance zone between 38,000 and 38,500, where trading volume has been concentrated. This suggests that there may be significant selling pressure at these levels.
  

• The next major resistance level is at 40,000, a psychological barrier that has historically acted as a cap on upward movements.
  

• On the downside, a minor support is observed around the 36,000 level, which could serve as a cushion in case of a downturn.
  

3.Stochastic Oscillator:

• The stochastic oscillator is currently hovering in the overbought region, indicating that the index might be due for a correction or at least a pause in its recent upward trajectory. Since the start of 2024, Stochastic at overbought and oversold levels had offered good signals in term of market timing.
  

Trading Strategy Insights: Preparing for Breakouts or Breakdowns
Traders can consider keeping an eye on the GBP/JPY currency pair, as its movements could provide valuable clues about the next direction for the Nikkei 225. Price action wise, a breakout of Nikkei225 above 38,500 could pave the way toward the 40,000 resistance level, while a breakdown below 38,000 could signal further declines to next support level of 36,000.

Trade Nikkei 225 with Phillip Nova now.