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Nikkei 225 Technical Outlook

By:   CFDtrading.com
  • 2010-02-02
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The Japanese benchmark is working its way deeper into a congestion pattern. A series of lower swing highs for the Nikkei 225 over the past two months has developed a convincing wedge formation with the more-established rising trend from April. Realistically, this congestion pattern has more than 500 points of room to maneuver so a trend-defining breakout is not necessarily imminent. However, there is the potential for a short-term break with the pivot and Fib confluence set at the psychologically-significant 10,000 level. A bullish break here is the more likely outcome; but should this level hold, we could quickly progress a deeper retracement of the dominant bear trend.



The Nikkei 225 rally from the October 2008 low is in 5 waves and therefore probably wave within a larger A-B-C corrective (probably a zigzag) advance.  Weakness from the January high likely extends to 9076 (wave iv low).  8494 is additional support.

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