The price of the Nikkei 225 index is fixed above the level of 37,000 points. The last time this happened was after the index reached its all-time high in 1989.
The bullish behavior of the Japanese stock market has the following reasons:
→ Strong corporate reporting. In particular, SoftBank shares rose 11% due to increased sales of its subsidiary Arm, which develops chips for the development of artificial intelligence.
→ Dovish view of the Bank of Japan's monetary policy. Thus, Bank of Japan Vice Governor Shinichi Uchida said that the central bank will not aggressively tighten its monetary policy even if it ultimately decides to end negative interest rates.
The Nikkei 225 index chart shows that:
→ the price moves within a large-scale ascending channel (shown in blue), which covers the entire year 2023;
→ in 2024, the price rises within the channel shown in black;
→ the 34,000 level was broken with an acceleration in the rally on January 10 - evidence that the bulls held a landslide victory here — so the area above 34,000 could serve as an area of support;
→ the median line of the blue channel and the lower border of the black channel can also serve as support for the price of the Nikkei 225 index in the event of a correction.
And a correction is very likely, given that the RSI indicator indicates a bearish divergence (a sign of depleted demand forces) — perhaps investors are busy taking profits after the price of the Nikkei 225 index has risen by more than 12% since the beginning of 2024.
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