Watching Key Long Term Trend in the Nikkei

July 22, 2014 5:07 AM

I remember the high flying Japanese market of the 1980’s.  Japanese people everywhere.  Buying Hawaii, Pebble Beach anything they could get their hands on.  Then came the crash the endless non recovery.  But through the last 20 years the Japanese stock market has gyrated quite a bit.  The monthly chart of the Nikkei Average below shows the expanding range and series of lower lows in 1998, 2003 and 2009.  There is also the series of lower highs 2000, 2007 and 2014 that have created a falling tend line as resistance.  With this last touch at the trend line at the end of 2013 there is hope that this will be the time it breaks through.  And the pullback from the high as been pretty muted so far.  The RSI is recovering as well.  Maybe this could be the one.  A break down under 13800 will solidify the case for another turn lower.  But keep your eyes on the round number 16000.  Above that and Japan could be moving into a brand new era.

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