NIKKEI: Technical Analysis – Strong data bullish for Nikkei

June 14, 2018

By IFCMarkets

Strong data bullish for Nikkei

Rising business investment and retail sales are bullish for NIKKEI. Will NIKKEI continue the climb?

Economic data from Japan after negative first quarter GDP report have been mostly positive. Industrial production growth accelerated to 2.6% over year in April from 2.5% in March, and retail sales rose 1.6% over year from 1% in March. Machinery orders, which are a proxy for business capital investment, also rose – to 9.6% over year in April after 2.4% contraction in March. With Bank of Japan expected to keep its monetary stimulus program intact Friday, rising business investment and retail sales are bullish for NIKKEI.

NIKKEI price

On the daily chart the NIKKEI: D1 has been rising after hitting nine-month low in the end of March. The price above the 50-day moving average MA(50) whish is rising too.

We believe the bullish momentum will continue after the price closes above the upper boundary of Donchian channel at 22999.70. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the last fractal low at 21919.40. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (21919.40) without reaching the order (22999.70), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

PositionBuy
Buy stopAbove 22999.70
Stop lossBelow 21919.40

Market Analysis provided by IFCMarkets


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