Technical Analysis – JP225 index finds support on uptrend line and 50-day SMA; sideways move in near term


Anthony Charalambous, XM Investment Research Desk

The JP225 stock index has been ascending since June 4, from the low of 20,276 to a two-month high of 21,796. The index gapped upwards on July 1, only to shift to a two-week trading range with lower and upper boundaries of 21,451 and 21,796 respectively.

The index currently finds support on the 50-day simple moving average (SMA), coupled with the uptrend line coming from the low of 20,276. The ADX confirms the absence of the trend, whereas other indicators agree that a short-term weakness of momentum is apparent, with the MACD, the trigger line and the RSI flattening in the positive area.

In case that, a short- to medium-term bullish bias persists, the immediate resistance of 21,708 would be tested before the two-month high and upper boundary near 21,796 would be reconsidered. Any additional gains might see next obstacle of 21,904.

On the other hand, if the price manages to shift the sentiment bearish, and penetrate the 50-day SMA and the uptrend line, the lower boundary of 21,451 could be re-seen before the 23.6% Fibonacci of the up move from 20,276 to 21,796, of 21,436. Bearish endurance could bring into play the support areas, before the gap, of 21,276, until the 38.2% Fibonacci becomes an issue at 21,214.

Overall, the outlook in the short- to medium-term is neutral, awaiting a direction jump.