Nikkei 225 Index forms harami candle as Japan stocks rebound

The Nikkei 225 Index rebounded on Tuesday as global stocks bounced back after the latest statements by Donald Trump. It jumped to ¥54,145, up 5% from its lowest point on Monday.

The rebound coincided with the retreat of the Japanese yen and bond yields. The ten-year yield dropped from 2.219% on Monday to 2.18%.

Crude oil and natural gas prices are falling 

The Nikkei 225 Index retreat happened as key commodity prices dropped. Brent, the global benchmark, was trading at $92, down sharply from the year-to-date high of nearly $120. 

Also, the West Texas Intermediate (WTI) dropped to $88 from last week’s high of $120. Natural gas has also dropped by 11% from the highest point this month.

The price action happened as Donald Trump moved to calm markets on Monday. In a statement, he said that his war goals were ahead of schedule and that it would end soon.

This report came on the same day that the Washington Post reported that some senior Israeli officials were getting concerned about the war.

Ending this war would benefit Japan, a country that depends solely on energy imports from the Middle East, including Saudi Arabia and Qatar.

It would also reduce inflation in the country and lower the odds that the Bank of Japan (BoJ) will not embrace a highly hawkish tone as analysts were expecting.

Still, there is a risk that energy prices will remain higher for a while as Iran has signaled that it is not interested in ending the war under US and Israeli terms. 

Officials argue that such an ending will incentivize the two countries to attack again. Also, Iran believes that the two countries are running out of defense equipment.

Therefore, crude oil and natural gas prices will likely remain elevated in the coming weeks, which will affect Japanese stocks

Top Japan stock movers today

Most Japanese stocks are doing well today. Lasertec, a company in the semiconductor industry, did well as it jumped by over 14% amid the ongoing demand.

Furukawa Electric and Sumitomo Electric stock prices soared by over 9%. Toyota Tsusho, Komatsu, Japan Steel Works, Fujikura, and Nintendo, and Mitsubishi Materials were among the top gainers as they jumped by over 5%.

Other top gainers in the index were firms like Disco Corporation, Kanadevia, Marubeni, and Yokohama Rubber.

On the other hand, the top laggards in the Nikkei 225 Index were companies like ROHM, SHIFT, Nitori Holdings, and Recruit Holding.

Nikkei 225 Index forms harami candle

The daily timeframe chart shows that the Nikkei Index retreated from a high of ¥59,333 in February to a low of ¥51,388. A closer look shows that it formed a harami candlestick pattern. 

A harami is characterized by a small candle that follows a large bearish candle pattern. Its name comes from the Japanese word for pregnant. It often lead to a rebound.

The Nikkei 225 Index has remained above the 100-day moving average. Therefore, the index will likely continue rising as bulls target the key resistance level at ¥58,000. A move above that level will point to more gains, potentially to the year-to-date high of ¥59,333.