Technical Analysis – JP 225 index in sight of historic peak
JP 225 index approaches its 1989 record high
Bulls might be exhausted as overbought signals detected
Japan’s 225 stock index (cash) marked another green day on Thursday despite GDP figures pointing to a recessionary economy, extending its weekly bull run closer to the 1989 record high of 38,915.
While the upward pattern has shown no cracks so far, the market might be at risk of a downside correction. Specifically, the price could not strengthen its positive momentum above the resistance trendline, which connects the highs from November 2023 and January 2024 at 38,200. The overbought signals coming from the RSI and the stochastic oscillator are adding to the negative risks.
In the event of a pullback, the index could initially retest the 37,770 region ahead of the 37,000 round level. An extension lower could challenge the 20-day simple moving average (SMA) near the tentative support trendline at 36,700. A break lower would dampen market sentiment, likely causing a sharper decline towards the 35,678 floor.
If the bulls stay in charge, the price may attempt to pierce through the critical 38,915-39,000 wall. A successful penetration higher would open a new chapter for the market, bringing the 40,000 number on the radar.
All in all, Japan’s 225 index is in a bullish mode, though whether the bulls have more fuel to extend the ongoing uptrend in the coming days remains to be seen as the price is currently hanging near an important resistance.
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