Navigating the Nikkei 225: A Pivotal Moment for Traders

Navigating the Nikkei 225: Key Technical Indicators Suggest a Pivotal Moment for Traders

By Eric Lee, Sales Director of Phillip Nova

The Nikkei 225 index is currently at an inflection point, with several technical indicators pointing to a tug-of-war between buyers and sellers.

Technical Indicators to watch out for:
1. GBP/JPY:

The GBP/JPY currency pair had shown strong correlation to Nikkei225. Given the range-bound nature of both GBP/JPY and Nikkei 225 since August 14, 2024, a breakout in either could signal a similar move in the other.

2. Volume Profile Analysis:

The volume profile indicator for the Nikkei 225 had suggested a resistance zone between 38,000 and 38,500, where trading volume has been concentrated. This suggests that there may be significant selling pressure at these levels.

The next major resistance level is at 40,000, a psychological barrier that has historically acted as a cap on upward movements.

On the downside, a minor support is observed around the 36,000 level, which could serve as a cushion in case of a downturn.

3.Stochastic Oscillator:

The stochastic oscillator is currently hovering in the overbought region, indicating that the index might be due for a correction or at least a pause in its recent upward trajectory. Since the start of 2024, Stochastic at overbought and oversold levels had offered good signals in term of market timing.

Trading Strategy Insights: Preparing for Breakouts or Breakdowns
Traders can consider keeping an eye on the GBP/JPY currency pair, as its movements could provide valuable clues about the next direction for the Nikkei 225. Price action wise, a breakout of Nikkei225 above 38,500 could pave the way toward the 40,000 resistance level, while a breakdown below 38,000 could signal further declines to next support level of 36,000.

Trade Nikkei 225 with Phillip Nova now.