Nikkei 225 Update

The USDJPY currency pair recovered some of its previous day losses and broke the 91 level before settling at 90.45. Weakness in the Yen is usually good news for Japan’s stock market as it helps in making Japanese product more competitive.

Most investors are not positive on Japan’s stock market as the country continues to be plagued by an aging population and deflationary forces in the market.

However looking at the phase chart, the Nikkei 225 is still in “Bullish” mode. The index faces a major resistance at 11000 level. If it is not able to go above the 11000 level then the support at 9867 needs to hold. If this support level is broken, then we will have a lower high and lower low. According to Dow theory, that will be bearish for the market.

Dow - Bullish In Short Term

The market is back to buying mood. The Dow Jones Industrial had a good outing on Friday moving up 122 points. It seems that the bulls are back in control with indexes making a move to the upside and breaking through resistance levels.

Market participation remains low as shown in the low volume of recent rallies. Short term indicators are turning positive however the long term technical picture has not improved much.

The phase chart for Dow Jones is now back to “Bullish” phase. The next resistance is at 10,750 level. The strategy is still to follow the trend but traders will need to be nimble and get out of the way if selling pressure resumes. The index is very likely to test it’s 200 day moving average again. The current 200 day moving average is at 9,670.