Technical Analysis – JP 225 index finds footing after yesterday’s strong pullback

The Japan 225 index (Cash) has improved marginally above the 50-period simple moving average (SMA) and is now tackling the converged Ichimoku lines around 29,168. The SMA’s bullish demeanours have yet to evaporate, which is positive for the upside outlook.

The price bounce within the support region between the 28,920 level and the 28,831 low, the former being the 23.6% Fibonacci retracement of the up leg from 27,131 until 29,424, recouped lost ground but the positive drive seems to have lost its power for now. This is also demonstrated in the mostly neutral Ichimoku lines and short-term oscillators. The MACD has fallen below its red trigger line towards the 50 level, while the RSI has risen to its neutral threshold.

If buying interest increases, initial upside constraints could occur around the 29,424-29,474 area, formed by highs in the previous sessions. Propelling past this obstacle, buyers may then target a key resistance section of 29,685-29,802. Conquering this zone could fuel optimism, thrusting the price towards the 29,981-30,068 boundary.

Currently a zone of support exists between the 50-period SMA around 29,112 and the 100-period SMA at 29,000. To the downside, support obstacles are congested starting with the support base between the 23.6% Fibo of 28,920 and the 28,831 low. Reinforcing from below is the 200-period SMA at 28,755, while a leg lower is the 38.2% Fibo of 28,579. Successfully sinking past these barriers, the price may then challenge the area between the 28,352 troughs and the 50.0% Fibo of 28,305.

Summarizing, the index needs to hold above the 28,831-28,920 support and the 200-period SMA for the minor uptrend to remain intact.

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