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Japan 225 offers opportunities beyond the US Indices

CMC Markets

By Chloe Edwards, Trade With Precision

To avoid the risk of sounding like a broken record, I’m not going to write another blog on the US indices. Those bullish trends continue, with the US NDAQ 100 continuing its reign above 11,000, and the SPX500 just now pushing above the previous all-time highs from February.

However, I am still looking for long opportunities across all timeframes while these trends continue. That said, what other indices around the world are currently offering trading opportunities?

The recovery on the other stock markets around the world has been significantly more muted than in the US, but one index in particular has piqued my interest of late – the Japan 225, or Nikkei index. Looking at the weekly chart of the Japan 225 above, the two main relevant horizontal levels of support/resistance I can see are the 22,950 level, shown in pink, and the highest level of resistance at 24,000, shown in red.

Taking a closer look at the daily chat, I can see that price has recently broken above the horizontal support/resistance level at 22,950, and pulled back slightly to retest it, while also starting to show higher highs and higher lows in price action, indicating the start of a possible uptrend. There is also now bullish geometry, with the 10, 20, 50 and 200 Exponential Moving Averages (EMAs) lined up in the correct order. The faster 10 and 20 MAs are pointing upwards in the direction of the trend, with the 50 and 200 yet to catch up due to the infancy of the potential uptrend.

The MACD and RSI indicators are also just starting to trend higher in a bullish fashion, showing convergence with price, which could confirm the trend momentum to the upside. On this timeframe, I will be awaiting the formation of a small bullish candle in the buy zone around the 10 and 20 EMAs, which seems to coincide with the potential support level at 22,950. The target I currently have in mind is at the aforementioned resistance level at 24000, as this is close to all-time highs in price and offers a good reward to risk trade.

The lower timeframes have yet to establish uptrends, but I will be keeping a close eye on them for this to happen in the near future, as potential trading opportunities here may offer the benefit of finding a higher reward to risk opportunity than trading on the daily timeframe.

Stay safe and healthy. Happy trading.


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