Technical Analysis NIKKEI : 2018-07-06

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IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

Japanese big manufacturers’ business confidence and consumers’ confidence declined in June. Will the NIKKEI continue declining?

Recent Japanese economic data were negative on balance after the Bank of Japan June meeting. While Nikkei manufacturing PMI rose in June and unemployment fell in May, retail sales growth slowed to 0.6% over year in May from 1.5% in April and construction orders fell 18.7% over year in May after 4% growth in previous month. And while housing starts rose in May, both the consumer confidence and Japanese big manufacturers’ business confidence reflected in quarterly “tankan” survey worsened in June from three months ago. Weaker economic data are bearish for NIKKEI.

NIKKEI

On the daily timeframe the NIKKEI: D1 is below the 50-day moving average MA(50) which has leveled off.

  • The Parabolic indicator gives a sell signal.
  • The Donchian channel indicates downtrend: it is tilted lower.
  • The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
  • The Stochastic oscillator is rising but has not reached the overbought zone.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 21452.90. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 22773.50. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (21452.90) without reaching the order (22773.50), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

PositionSell
Sell stop Below 21452.90
Stop loss Above 22773.50

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