Title: Nikkei 225 Technical Outlook: Bullish Momentum Aiming Toward 60,000 – Chart Analysis
Original author: Kelvin Wong, MarketPulse
The Nikkei 225 Index, Japan’s premier equity benchmark, continues to exhibit strong upward momentum with bullish acceleration intact. From a technical standpoint, the index is maintaining its trajectory after breaking above significant resistance zones and is now poised to challenge higher target levels, particularly in the direction of the psychological 60,000 mark in a first potential step. This bullish scenario is supported by price action patterns, momentum indicators, and medium-to-long-term Fibonacci projections.
This analysis draws from the original work by Kelvin Wong, Senior Market Analyst for Asia-Pacific at OANDA, published on MarketPulse.
Current Price Structure and Momentum
– After an initial corrective dip from its March high of 41,087 to a low of 36,733 in April, the Nikkei 225 Index formed a bullish reversal at this low level.
– This reversal carved out what appears to be a minor ascending channel, which is visible through the series of higher highs and higher lows since April.
– The index has since surged past a key medium-term range resistance at 41,000. More recently, it cleared the March 22 high of 41,087, confirming a breakout.
– Persistent price action above the 20-day moving average (now acting as dynamic support) continues to support the bullish narrative.
Bullish Acceleration Confirmed
– The recent breakout above the 41,000-41,087 level has eliminated prior supply clusters and psychological resistance.
– This has triggered what technical analysts refer to as a “bullish breakout rally,” where prior resistance now acts as support, encouraging further participation from trend-following investors.
– Price also sits well above the 50-day moving average, reinforcing that momentum is favoring the upside.
Momentum Indicators Support Upside Trajectory
– Daily RSI (Relative Strength Index) has moved into bullish territory, hovering above the 60-70 range without exhibiting a bearish divergence.
– This confirms that strength is validating the price advance and is not yet overextended.
– The short-term MACD (Moving Average Convergence Divergence) histogram also remains positive, suggesting consolidations are shallow with more room for growth.
Key Levels and Fibonacci Projections
To estimate future rally targets, Fibonacci extension levels have been plotted from the March high to the April low.
Primary Resistance Target (First Major Objective):
– 50% Fibonacci projection from the March 22 high (41,087) to the April 19 low (36,733), extended from the April 19 breakout point.
– This projection identifies 48,200 as the next notable resistance level.
– This level is currently being challenged with recent price momentum testing near 47,000 at the time of writing.
Secondary Resistance Level:
– The 100% Fibonacci projection implies a measured objective near 55,400.
– Should the index maintain bullish momentum and clear the 50% projection zone decisively, the next upside projection would open.
– The second resistance serves as a pivot point to assess whether the market has enough fuel to extend toward the key psychological barrier of 60,000.
Long-term Fibonacci Projection:
– By applying longer-term Fibonacci extension levels from the 2020 pandemic low (~16,000), extrapolated from critical pivot highs and corrective declines, the next macro resistance zone falls between:
– 1.382 Fibonacci extension: 57,200
– 1.618 Fibonacci extension: 60,000
– These confluences suggest that the 60,000 level is not only psychological but also technically reinforced as a target zone over the medium to long term.
Key Near-Term Support Areas
Should the index pause in its advance or experience a temporary retracement, the following areas should provide potential support:
– Immediate support: 44,300, coinciding with the newly formed minor swing low and the rising
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