Technical Analysis – JP 225 index rockets to 34-year high
JP 225 index re-activates 2023 uptrend
More upside likely but gains could be limited
Japan’s 225 stock index (cash) rocketed to a 34-year high of 34,827 on the back of a tech rally on Wednesday and there might be space for further progress.
Both the RSI and the stochastic oscillators have surged into the overbought territory, but they have yet to show signs of weakness, reflecting a bullish bias. Besides, there is no major resistance in sight until the upper band of the short-term bullish channel at 35,375. The 36,000 psychological mark could come under the spotlight too in the event of a steeper increase.
Should traders engage in profit-taking practices, the index could slump to re-test its 20- and 50-day simple moving averages (SMAs). The channel’s lower boundary at 33,000, and the neckline of October’s double bottom pattern seen at 32,650 could be a more important region as any close lower would reduce confidence on the latest upturn, likely prompting a fast decline towards the 200-day SMA at 31,885.
All in all, the JP 225 stock index has revived its 2023 uptrend after six months, boosting optimism for a continuation higher. Yet, the market is already trading within overbought waters, suggesting that a downside correction could soon take place.Related Assets
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