JP225 Short Trade Opportunity!It appears that there is a bearish divergence present. This suggests that we can enter a short position, with a stop loss above the high, and aim for the recent low.
JP225 trade ideas
cup n handle possibilityjust posting so i can come back and check in a few months. nikki go up before it can go down. target 38-39k, then back down to support.
Nikkei to continue in the uptrend?NIK225 - 24h expiry
We are trading at overbought extremes.
A lower correction is expected.
The bias is still for higher levels and we look for any dips to be limited.
We therefore, prefer to fade into the dip with a tight stop in anticipation of a move back higher.
Further upside is expected although we prefer to buy into dips close to the 38910 level.
We look to Buy at 38910 (stop at 38710)
Our profit targets will be 39410 and 39510
Resistance: 39626 / 40000 / 41000
Support: 38415 / 37940 / 37020
Risk Disclaimer
The trade ideas beyond this page are for informational purposes only and do not constitute investment advice or a solicitation to trade. This information is provided by Signal Centre, a third-party unaffiliated with OANDA, and is intended for general circulation only. OANDA does not guarantee the accuracy of this information and assumes no responsibilities for the information provided by the third party. The information does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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Nikkei225 surpasses ‘Historic Milestone’ on mixed inflation signOn Friday, the rising sun market surpassed a significant milestone at 38,957.44 points, surpassing the 1989 trading level , just before the so-called "Lost Decade". During the period from 1991 to 2001, Japan experienced economic stagnation and price deflation, from which it emerged, albeit at a slower pace compared to other industrialized nations. In terms of core (year-on-year) inflation, Japan has maintained levels above the Bank of Japan's 2% target since November 2022, reaching a peak of 4.3% in September 2023, the highest in 42 years. However, a softening has been observed in December to 3.7%, with forecasts suggesting a further drop to 3.2% in January 2024, following 20 years of economic policies known as "Abenomics". This trend has led to a slight depreciation of the yen against the dollar (JPYUSD) , especially following data on Japanese inflation, projected at 1.8% next Tuesday versus 2.6% previously. This outlook could reinforce the anti-easing stance of the Bank of Japan, the most reluctant and cautious among central banks in developed markets.
As for the 30-year Japanese Bond, a slight revaluation of 0.72% has been observed, coinciding with US bank data that pushed the index to highs. Rebound levels are at 33,905.71 and 30,509.91 points, with key support at 24,396.24 points, reached in March. Japanese tapering policies are likely to continue to underpin the index higher as the country's debt is reduced. In the long term, an uptrend is expected, although a prior adjustment around 39,636.65 points is not ruled out. Currently, the RSI indicator points to an overbought level of 75.05%, which could indicate the need for an adjustment in the short term to form the aforementioned rebound.
Ion Jauregui - AT Analyst
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Firepower abounds for Japanese equitiesJapanese equities ended 2023 on a high note. Japan’s post pandemic re-opening, accommodative monetary stance, high equity risk premiums and improving corporate governance reforms were important tailwinds for Japanese equities in 2023.
Over the last 12 months Japan has benefited from global investor inflows who are diversifying their investments in Asia, with geopolitical tensions and sluggish growth causing a rotation from China to Japan. There are several catalysts in place to fuel Japan’s equity market rally:
Increasing capex & higher wage growth
Revamping the Nippon Individual Savings Account (NISA)
Corporate Japan’s ongoing reform initiatives
Capex outlook bolstered by manufacturers
The end of deflation is a catalyst unique to Japan. The Bank of Japan’s (BOJ) December Tankan survey indicates manufacturers will continue to boost capex in fiscal 2024 to prepare for the next growth cycle. Manufacturers plan to increase capex in fiscal 2024 by 14.6%2. Higher cash holdings for Japanese corporates and labour shortages are important incentives to invest in automation over the long run. Japan is at a demographic crossroads. The employment conditions diffusion index (DI) highlights Japan’s labour shortage to be the worst in 30 years3. To compensate, companies will need to invest in improving productivity.
Demographics driving wage inflation
At the same time, waning labour supply owing to an aging population is likely to bring back wage growth. The spring wage growth negotiations in 2023 drove wages up by 3.6%4 (the highest level in 30 years) and 2024 could see a further rise. Demand continues to increase in healthcare and social welfare owing to increasing domestic demand. Strong wage growth remains the key to the sustainability of inflation and inflation is likely to influence investors choice of asset allocations. As long as Japanese equities continue to benefit from inflation, we believe it would be natural for funds to increasingly flow into Japanese equities.
Japan’s savings to investment drive
Japan is transforming into an asset management led nation under the leadership of Prime Minister Kishida. In an effort to unlock nearly US$14Trn of household financial assets tied up in cash deposits, Japanese leaders are embarking upon reforms, like the introduction of 401(k)s in the US back in the 1970s. This is being done with the introduction of a revised Nippon Individual Savings Account “NISA” program offering tax benefits and portability. Starting in 2024 maximum investment amounts allowed under NISA have been increased and investors can enjoy the system’s tax benefits permanently.
Japan’s wave of reform
Corporate Japan’s ongoing reform initiatives, which include the Tokyo Stock Exchange’s (TSE) March 2023 announcement dubbed the “Price to Book (PBR) Guideline”, discussed here had a strong impact on companies. This was evident from the immediate rise in payout ratios following the announcements. By the end of January, the TSE plans to provide a list of companies that have either disclosed capital efficiency measures or have such measures under consideration. There is a strong likelihood that companies ‘under consideration’ could surprise on the upside with capital return announcements in the upcoming results season.
Japan’s wave of reform
Corporate Japan’s ongoing reform initiatives, which include the Tokyo Stock Exchange’s (TSE) March 2023 announcement dubbed the “Price to Book (PBR) Guideline”, discussed here had a strong impact on companies. This was evident from the immediate rise in payout ratios following the announcements. By the end of January, the TSE plans to provide a list of companies that have either disclosed capital efficiency measures or have such measures under consideration. There is a strong likelihood that companies ‘under consideration’ could surprise on the upside with capital return announcements in the upcoming results season.
Japan continues to deliver strong earnings results
Japan’s economy has continued to recover, and we expect the economy to withstand the modest slowdown in global growth. Japanese equities are testing 34-year highs in 2024, bolstered by 2Q FY3/24 earnings results. Net income for Japanese equities came in 6.2% ahead of consensus, with beats concentrated in domestic-oriented sectors including utilities & food/household products5. Corporate reforms had a significant impact on chemicals and auto parts sectors. Japan’s earnings revision breadth remains in positive territory in contrast to earnings trends in China and Europe. Positive earnings revisions alongside a structural trend to rising return on equity (ROE) is supporting Japan’s equity outperformance versus the rest of the world.
Monetary policy likely to stay on hold until Q2
An important concern in 2024 remains the path of monetary policy by the BOJ, its impact on the yen and the repercussions for Japanese equities. Governor Ueda told Prime Minister Kishida that the Bank will monitor the strength of domestic demand, taking into consideration whether higher wages push services prices higher and the 2024 wage outlook. Recent inflation data continues to slow, as the prior high import costs work through the system amidst soft domestic demand. We expect the BOJ to exit negative interest rates in Q2, taking into consideration the spring wage negotiations. The yen may appreciate in H2 2024, on narrowing US-Japan interest rate spreads. A stronger yen could renew concerns over a possible negative effect on Japanese corporate earnings. However, a strong yen may not be too much of a hindrance to Japanese equities, with the market set on the theme of further vitality in the economy with rising wages and improving capex.
Sources
1 Factset, WisdomTree as of 31 December 2023
2 Bank of Japan, 13 December 2023
3 Bloomberg as of 31 December 2023
4 Japanese Trade Union Confederation (Rengo)
5 IBES, Factset, MSCI Japan
This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
NKD FUTURES/JPY 225 INDEX15 Minute Chart with the Ichimoku Indicator overlay. I think it probable that these gaps will get filled during the Australian/Asian Sessions. My overall narrative is:
*Price will retrace into the Daily/Weekly imbalances.
*I have Alerts set at the Fair Value Gaps because I may trade the first Hour of the Asian Session.
Nikkei to continue in the upward move?NIK225 - 24h expiry
Short term bias is bullish.
Levels close to the 50% pullback level of 37636 found buyers.
Preferred trade is to buy on dips.
The trend of higher lows is located at 37190.
Further upside is expected although we prefer to buy into dips close to the 37640 level.
We look to Buy at 37570 (stop at 37290)
Our profit targets will be 38270 and 38370
Resistance: 38950 / 40430 / 40980
Support: 36550 / 34155 / 33325
Risk Disclaimer
The trade ideas beyond this page are for informational purposes only and do not constitute investment advice or a solicitation to trade. This information is provided by Signal Centre, a third-party unaffiliated with OANDA, and is intended for general circulation only. OANDA does not guarantee the accuracy of this information and assumes no responsibilities for the information provided by the third party. The information does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
You accept that you assume all risks in independently viewing the contents and selecting a chosen strategy.
Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, Oanda Asia Pacific Pte Ltd (“OAP“) accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore customers should contact OAP at 6579 8289 for matters arising from, or in connection with, the information/research distributed.
The continuation of the upward trend is more likely.Dear Friends,
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As someone interested in the Elliott Wave principle, I find it a valuable tool for analyzing the market. I have developed my approach by combining this principle with my personal experience and by considering various scenarios that are likely to occur in the market.
I am sharing my analysis with you, but please note that I am not providing any buy or sell signals. I aim to share my unbiased analysis with you so that you can use it as a guide to make informed decisions.
In the attachment, you will find my previous analysis of the same market, so you can compare and see the differences. All the details of my analysis are clearly labeled, making it easy for you to understand (although having a basic familiarity with the Elliott Wave Principle theory will help you understand the analytical idea more easily).
I have been studying the Elliott Wave principle for almost three years now. With time, my understanding of this knowledge and experience has increased. What I have achieved so far is a legacy of a genius named Ralph Nelson Elliott, and I am truly satisfied with my progress. May his soul rest in peace and his memory be cherished.
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Nikkei 225 Index Price Sets 34-year HighThe price of the Nikkei 225 index is fixed above the level of 37,000 points. The last time this happened was after the index reached its all-time high in 1989.
The bullish behavior of the Japanese stock market has the following reasons:
→ Strong corporate reporting. In particular, SoftBank shares rose 11% due to increased sales of its subsidiary Arm, which develops chips for the development of artificial intelligence.
→ Dovish view of the Bank of Japan's monetary policy. Thus, Bank of Japan Vice Governor Shinichi Uchida said that the central bank will not aggressively tighten its monetary policy even if it ultimately decides to end negative interest rates.
The Nikkei 225 index chart shows that:
→ the price moves within a large-scale ascending channel (shown in blue), which covers the entire year 2023;
→ in 2024, the price rises within the channel shown in black;
→ the 34,000 level was broken with an acceleration in the rally on January 10 - evidence that the bulls held a landslide victory here — so the area above 34,000 could serve as an area of support;
→ the median line of the blue channel and the lower border of the black channel can also serve as support for the price of the Nikkei 225 index in the event of a correction.
And a correction is very likely, given that the RSI indicator indicates a bearish divergence (a sign of depleted demand forces) — perhaps investors are busy taking profits after the price of the Nikkei 225 index has risen by more than 12% since the beginning of 2024.
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