As the chart indicates, the value of the Nikkei 225 stock index (Japan 225 on FXOpen) has risen above the 41,000-point level — its highest mark since July 2024.

The primary bullish driver is the conclusion of a trade agreement between the United States and Japan. According to media reports, the deal will involve Japan paying a 15% duty on exports to the US, down from the previous 25% tariff. Shares of automotive companies are among the top gainers on the Japanese stock market.

European stock indices have also risen, as EU officials are scheduled to visit Washington on Wednesday, raising hopes for a potential US-EU trade agreement.

Technical Analysis of the Nikkei 225 Chart

Approximately a month ago, we outlined an ascending channel based on the price fluctuations observed in 2025. This formation remains relevant, and:

→ The price has moved into the upper half of the channel, suggesting that the median line may act as a support level going forward.
→ The nature of the latest price action is worth noting: as an immediate reaction to the news of the deal, two long bullish candles formed on the chart. However, once the price reached its 2025 high, upward momentum slowed sharply.
→ The RSI indicator signals overbought conditions.

Thus, it is reasonable to assume that, following an approximate 3.6% surge over an eight-hour period, the bullish momentum may have largely been exhausted. Nikkei 225 (Japan 225 on FXOpen) could now be vulnerable to a pullback, potentially towards the median line. Nonetheless, the ultimate direction will be shaped primarily by fundamental news.

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