Technical Update - Nikkei under pressure and could take out key support. Banks are going against the overall trend Technical Update - Nikkei under pressure and could take out key support. Banks are going against the overall trend Technical Update - Nikkei under pressure and could take out key support. Banks are going against the overall trend

Technical Update - Nikkei under pressure and could take out key support. Banks are going against the overall trend

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Nikkei/JP225 cfd is looking weak and could take out key support sending the Index in to a tail spin. Support at 25,529 is key.
But it is not the banks fault. Topix Banks sector (ETF) is in a bull trend that currently doesn’t seem to be over. Short-term correction likely though


Nikkei 225 (Future/JP225 cfd) is testing the upper part of the key support at around 25,529. Multiple times the past year JP225 has spiked down and bounced from 25,529. With the 200 weekly SMA providing further support this could also be the scenario this time. However such a bounce off support could very well be limited.
21, 55 and 100 weekly Moving Averages are all declining. In fact 21 has crossed over the 55 SMA in what is called a death cross i.e., strong bearish underlying momentum.


On the daily chart almost identical picture; all Moving Averages are declining. Add to that that the daily RSI is in negative sentiment and no divergence supporting the bearish view.
If JP225 closes the week below 25,529 AND below 200 weekly SMA medium-term down trend has been confirmed and a sell off down to around 22,872 support is likely. However, a spike down to 0.618 retracement of the Q2-2020 to Q1-2021 uptrend around 21,659 which is within few points of strong support back from 2020 at 21,705.
A possible short-term bounce is likely to run out of steam between 26,500-27,000.

Source all charts and data: Saxo Group

JP225 is below the cloud on the weekly chart underlining the bearish outlook for JP225. Lagging span is currently at the minor support at 25,884.

Topix Banks
Japanese banking Index in the form of the Topix Banks ETF has gone ballistic lately moving against the general market. But now the Topix Banks seems to be topping out short-term. Divergence on daily RSI indicates a correction is looming.
Support at around 199 is key, a close below will reverse the uptrend and could push Topix Banks ETF down to around 183-175.

However, on weekly and monthly chart there is no divergence and RSI is above 60 i.e., Topix Banks is set to move higher after a likely short-term correction.
Topix Banks is above the cloud on all time periods suggesting higher levels.
If Topix Banks closes above 222 a move to 254 is likely but longer-term there is room up to resistance at around 317 which 50% of the 2006-2010 down trend.

RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.