Indices

Nikkei 225 Index May Drop Below 31,000 Points – Here’s Why

Published by
Written By: Abdullah Sarwar
Share
    Summary:
  • Nikkei 225 Index Forecast - INDEXNIKKEI: NI225 needs to flip 30,840 level into support in order to break its 1989 all-time high.

Nikkei 225 Index (INDEXNIKKEI: NI225) is showing a good recovery after an intense sell-off this month. The index still stands 5.6% below its yearly peak. The pullback occurred after the benchmark of Japanese equities surged to its highest level in 34 years in June 2023.

On Tuesday, the Japanese chips and bank stocks extended their gains. This led to a rise in the benchmark index, which closed the day 0.92% higher than its previous close. The positive sentiment in the Japanese stock markets can be attributed to a rebound in the US stocks.

Chinese Economy Generates Headwinds For Asian Stocks

The Asian equities are currently facing headwinds due to the piling up of weak economic data from China. The world’s second-biggest economy has started to experience deflation instead of recovering to its pre-lockdown levels. This has triggered a sell-off in Japanese stocks as well.

The latest technical analysis reveals that the Nikkei 225 index may drop more before a strong rebound. The ongoing bounce could be due to the recovery in the S&P 500 index and the Nasdaq 100 indices.

Nikkei 225 Index Forecast

Considering the bullish market structure on the following chart, my long-term Nikkei 225 index forecast remains bullish. However, in the short term, the index must flip the 30,840 resistance level into support in order to aim more upside.

The index currently stands at 31,856. In the coming days, it may retest the above-mentioned level to turn it into support. If the index goes up from here, this retest will remain on the cards. Considering a strong sell-off in the US stocks in the past few weeks, I’m waiting for a bullish reversal signal before going long again.

You are also welcome to follow me on Twitter, where I share my personal trades and outlook on the US stocks.

INDEXNIKKEI: NI225 Chart

This post was last modified on Aug 22, 2023, 16:41 BST 16:41

Written By: Abdullah Sarwar

Abdullah Sarwar is a blockchain analyst and a cryptocurrency investor with more than 5 years of experience. He specializes in providing crypto price projections based on their fundamentals and price charts. He is also a successful day trader. He graduated in 2015 with a degree in electronic engineering. In his free time, he loves listening to electronic music and playing with trading bots.

Published by
Written By: Abdullah Sarwar