Technical Analysis – JP 225 index holds above 200-SMA after two-month low

Japan’s 225 stock index (cash) slid to a new two-month low of 27,196 on Wednesday but encouragingly it erased some losses to climb back above the 200-day simple moving average (SMA) and stay out of the broken bearish channel.

From a technical perspective, the latest bearish round is not over yet as the RSI is sloping downwards below its 50 neutral mark and the MACD is decelerating below its red signal and zero lines.

An extension beneath the 27,370 – 27,073 area, where the long-term tentative ascending trendline from January 2020 is also positioned, could quickly test the 26,865 restrictive zone. If that floor cracks, selling forces could sharpen towards the 26,230 number.

In the event of an upturn, the 20-day SMA at 27,879 could immediately block the way towards the 28,653 resistance. A faster recovery could even re-challenge the 2022 limits within 29,229 – 29,390 region.

In brief, negative risks keep lingering in the background for Japan’s 225 index, with sellers likely awaiting a clear step below 27,370 to gain fresh impetus. 

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