What is from high significant importance in the nikkei index price action that was built the weeks and months before the crash that it is actually a triple top which is a rare formation in global markets and signals the heavy reversal of the before established uptrend. As you can see in marked in my chart with the blue circles the third top confirmed the overall high in the structure before the corona-breakdowns happened and the market crashed down below support. The snap-back movement from 16470 to the actual price condition was neutral and normal after such a volatile move to the downside, there was also a breakaway gap that was filled but as we are approaching resistance here in the structure the continuum of the before established downtrend may come faster as expected.
At the moment we see the index exactly confirming the neckline of the Tripple top which you see marked in orange in my chart, this level at 20500 is actually also building a coherent and logical resistance-cluster because it is corresponding with the 200-EMA which you see marked in black, this is an important because it was support in the uptrend before and now it is resistance, mixing these significant signs all together we currently trade at an important resistance which will be realized when we get a sudden pull-back in the lower direction again as marked in my chart. The targets which you see in my chart will be realized when the index confirms below the lower boundary light blue-trend line, this will add to the shape we actually have in the market. When considering the local support to behold at 18600 it is possible that the market moves one leg more to the upside but the question is if this move will be strong enough because there is a bunch of resistance which shouldn't be ignored.
This formation is playing into the overall stock-market situation which has a shape. Some people believe that the bear market in stocks is over now and that we will see new all-time-highs in the major global markets but the percentage possibility for this scenario is at the moment pretty marginal because the real economy is still struggling with global corona restrictions and otherwise the economic landscapes still do not look worthful. When the little possibility fulfills and stocks see new highs the further bear-market which is coming will just be more dramatic and heavier, therefore, we need to concentrate on the anticyclical truffles within the markets which are going against the trend and profiting from the crisis.
In this manner, thank you for watching the analysis, support for more market insight and all the best ;)
Prosperity is the blessing of the old market, adversity is the blessing of the new.
Information provided is only educational and should not be used to take action in the markets.