Nikkei 225 bullish momentum continues as the USD/JPY rebounds
The Nikkei 225 index has staged a strong rebound as investors buy the dip in Japan stocks. It surged to a high of ¥29,200, which was the highest level since January 5 of this year. It has risen by more than 17% from the lowest level this year. This performance has mirrored that of other popular indices like the Nasdaq 100 and S&P 500.
Japan stocks reboundCopy link to section
The Nikkei 225 index has bounced back as sentiment among investors buy the dip in global stocks. It also happened as the Japanese yen resumed its strong sell-off. The USD/JPY price has risen by more than 3% from its lowest level this year. A weaker yen is usually positive for most companies in the Nikkei index because it makes their goods more affordable.
The index has bounced back even as concerns about Softbank remain. The company published a giant $23 billion loss as the tech sell-off continued. As a result, it lost the backing of Elliot Management, one of the best-known hedge fund managers. Still, the recent recovery of tech stocks has lifted the Softbank stock price by over 37% from its lowest level this year.
The Nikkei 225 index rose as demand for Japanese stocks by foreigners remained steady. They bought shares worth over ¥45 billion in July after they bought an additional ¥61 billion in June this year.
The worst performers in the Nikkei index on Thursday were Recruit Holdings, Shin Etsu Chemical, Yamaha, Showa Denko, and Panasonic. These shares dropped by more than 2%. On the other hand, the best performers were companies like Nippon Sheet Glass, Hitachi, Maruha, and Kobe Steel among others.
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Nikkei 225 forecastCopy link to section
The four-hour chart shows that the Nikkei 225 index continued its bullish trend. It rose to over ¥29,000 as I had predicted a while ago. As the stock rose, it moved above the important resistance point at ¥28,387, which was the highest point on June 10th. It has moved above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has continued rising.
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Therefore, the path of the least resistance is higher, with the next key level to watch being at ¥30,000. A drop below the support at ¥28,387 will invalidate the bullish view.