The Japan 225 stock index saw a significant decline, dropping by a staggering 21% to reach a 10-month low of 30,361. This decline was primarily fueled by recession fears in the US and a strengthening yen. The index experienced its sharpest correction below the 200-day simple moving average, hitting levels not seen since October 2023. Despite this, it managed to close the day around 33,336, signaling a potential bounce back.
In order for the JP 225 index to rally towards the 35,470 barrier, it will need to surpass the resistance level at 33,585. Beyond that, key levels such as April’s low of 36,692 and the 200-day SMA could pose as obstacles before reaching the 38,000 psychological mark. Technical indicators such as the RSI and stochastic oscillator suggest that the market is nearing oversold territory, hinting at a possible reversal in the near future.
However, a close below the 33,130 region could delay any potential recovery, shifting the focus towards the ascending trendline connecting the lows of 2020 and 2023 at 31,400. Despite its historical significance, this trendline failed to prevent Monday’s freefall. If selling pressure persists, the index might revisit the double bottom area of 30,300 from October, with the 29,300 region acting as the next pivot point. Unless the price manages to break above 33,585, selling interest is likely to remain high in the upcoming sessions.
Overall, the JP 225 index is currently facing significant challenges amidst the global stock meltdown. While there are potential recovery levels and support zones to watch out for, the bearish sentiment could continue to dominate the market until a decisive break above key resistance levels is achieved. Traders and investors should closely monitor technical indicators and price action to determine the future direction of the index.