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Article / 03 June 2016 at 11:44 GMT

Nikkei 225 on the verge of a breakout

Technical Analyst / Saxo Bank
  • Nikkei 225 is in an ever-narrowing range
  • Breakout should be imminent at roughly 75% from apex
  • RSI and MACD don't give much guidance right now
  • A 10% move followed equally narrow Bollinger® bands in March
stock exchamge
 A breakout looks increasingly likely for Tokyo's leading index. Pic: iStock

By Kim Cramer Larsson

The Nikkei 225, Japan's leading stock index, has so far this year "traded" in a narrower and narrower range, forming a symmetrical triangle pattern.

A breakout from here could result in a nice move. The question is of course; which direction? Statistically, it is roughly 50/50 and usually approximately 75% of the way to the apex i.e. where the two trend lines meet so the breakout should be imminent.

Indicators such as RSI and MACD don't give much guidance at the moment. However, sometimes we see a breakout on the RSI pattern prior to the break out on the price graph itself.

Bollinger®  bands are extremely narrow and approaching a level after which a new move is usually initiated. The last time we saw this narrow a bandwidth was in March and that was followed by a 10% move.

If we see a bullish break look out for resistance at around 10,295 and 10,870.
Support after a bearish break out would be around 15,820, 15,330 and the February low just below 15,000.

Nikkei 225 Daily
Source: Saxo Bank

– Edited by Clare MacCarthy

Kim Cramer Larsson is a technical analyst at Saxo Bank
04 June
brian1983 brian1983
given the poor nfp i am thinking of shorting nikkei on mon


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