Technical Analysis – JP 225 index tries to shake bigger bullish bias

The Japan 225 stock index (Cash) recently dwindled from its new multi-decade high that was overall in-line with the 30,645 level, which happens to be the 176.4% Fibonacci extension of the down leg from 24,036 to the multi-year low of 15,384. The Ichimoku lines are reflecting a clear waning in positive sentiment but the pullback seems to be unable to jolt the ascent, as it has hit a snag around the region of 28,849-29,177. Furthermore, the soaring simple moving averages (SMAs) are defending the bullish structure.

The short-term oscillators are demonstrating the latest price fading in the index and are suggesting the retracement may still have a bit of fuel in the tank. The MACD, below its red trigger line, is diving in the positive region, while the RSI has deteriorated from overbought levels and is testing the 50 threshold.

If selling interest persists, immediate support may develop from the reinforced section of 28,849-29,177. In the event the price manages to slip beneath this hardened boundary, the 50-day SMA at 28,509 could bear its claws before the cloud’s upper surface at 28,100 comes into play. Should an even deeper retracement transpire, the critical 27,578 trough and the 27,000 hurdle may make efforts to rescue the climb.

However, a foothold within the zone of 28,849-29,177 could thrust the price towards the red Tenkan-sen line at 29,812 and the 30,224 high. Overcoming these obstacles, the 176.4% Fibo extension of 30,645 and the adjoining all-time high of 30,711 may form a tough limiting barrier. If the price triumphs and pushes towards new heights, the 31,200 resistance could come next before the 32,000 handle.

Concluding, for the index to sustain some damage, the price would need to sink below the 27,578 trough. Yet, as things stand the index is presenting a sturdy bullish demeanour above the SMAs and the border of 28,849-29,177.

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