Nikkei 225
The Nikkei 225 and the Hang Seng index declined today as investors reacted to the performance of the bond market. Also, a prominent Chinese official warned about the ongoing bubble-like atmosphere. The two indices are down by 0.20% and 1.10%, respectively.
What happened: US equities rallied yesterday after the short and longer-term bond yields retreated. Still, it seems, investors are still having memories of what happened last week when global bond yields rose. In a statement, Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC) said that they were extremely worried about the bubbles in overseas market.
Further, the Nikkei 225 and Hang Seng are falling because of the overall strong data from around the world. Earlier today, data from Japan showed that the unemployment rate remained at 2.9%. Also, data released yesterday revealed that the country’s manufacturing sector expanded for the first time in more than a year. Therefore, there are signs that the Bank of Japan will start tightening in the near term.
The four-hour chart shows that the Nikkei 225 index has formed an ascending channel pattern. The index is slightly above the lower side of this channel. Also, the Relative Strength Index (RSI) has continued to drop. Therefore, the index may continue rising as bulls target the upper side of the ascending channel at ¥30,715. However, a drop below the lower side of the channel at ¥29,000 will push it lower because it will send a signal that there are still sellers in the market.
The four-hour chart shows that the Hang Seng index has formed an ascending channel. In fact, a closer look shows that the index has a close resemblance to the Nikkei 225. The current price is at the lower side of the channel while the RSI is also declining. Therefore, the index may bounce back as investors target the upper side of the channel. Like the Nikkei, a decline below the lower support will see it decline.
