Market News & Analysis
Short Term Outlook of Nikkei Index: Trading Within The Rising Wedge
Medion Jim May 1, 2020 11:42 AM
On the economic, Japan's industrial production fell 3.7% on month in March (-5.0% estimated), and retail sales declined 4.5% (as expected), according to the government. Housing starts dropped 7.6% on year in March (-15.9% expected) and construction orders declined 14.3% (+0.7% in February). Meanwhile, Consumer Confidence Index slid to 21.6 in April (27.6 expected) from 30.9 in March. From those economic data, we could see that Japan's economy is suffering from the effect of COVID-19.
On a daily chart, the Nikkei index retreated from 20350 and filled the gap created on April 30 after touching the 50% retracement between January top and March low.
Currently, the index is trading within the "Rising Wedge". This pattern could be a reversal pattern or continuation pattern. A break below the lower support line could indicate a reversal signal. Oppositely, a break above the upper resistance line would signal the resumption of recent trend. As the prices have not validated the pattern, it is better to watch it closely and stay neutral.
On the upside, a break above the recent high at 20350, where the unfilled gap occurred on March 9 also, would bring a further advance to the resistance level at 21700 (the reaction high on March 3).
On the downside, breaking below the support line would call for a return to the previous low at 18850. Crossing below 18850 would call for a drop to the support level at 17650 (the reaction low on April 3).
Source: GAIN Capital, TradingView
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.