NKY still stuck within tight trading range
Nikkei 225 Index (NKY) Technical Analysis Report for Jan 11, 2019 | by Techniquant Editorial Team
NKY ended the week 4.08% higher at 20359.70 after gaining ¥195.90 (0.97%) today ahead of tomorrow's Coming of Age Day market holiday. Closing above Thursday's high at 20345.92, the Nikkei confirmed its breakout through the prior session high after trading up to ¥43.97 above it intraday.
Daily Candlestick Chart (NKY as at Jan 11, 2019):
Friday's trading range has been ¥95.15 (0.47%), that's far below the last trading month's daily average range of ¥320.15. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly higher than usual for NKY. Prices continued to consolidate within a tight trading range between 19920.80 and 20494.35 where it has been caught now for the whole last trading week.
Two candlestick patterns are matching today's price action, the Bullish Short Candle and the White Candle which are both known as bullish patterns.
Prices are trading close to the key technical support level at 20211.57 (S1). After having been unable to move above 20345.92 in the previous session, Nikkei 225 ran into sellers again around the same price level today, failing to move higher than 20389.89. The last time this happened on November 19, 2018, NKY lost -1.09% on the following trading day.
Although the stock index is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
Buying could speed up should prices move above the close-by swing high at 20494.35 where further buy stops might get triggered. Selling could accelerate should prices move below the nearby swing low at 20101.93 where further sell stops might get activated.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "High close to prior High" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Nikkei 225. Out of 429 times, NKY closed higher 55.71% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 57.58% with an average market move of 0.65%.
With five out of the other six Major World Indices closing lower today, the ones that stand out on the negative side are FTSE losing -0.36% and DAX closing -0.31% lower. On the flipside the best performer has been HSI closing 0.55% higher. Read more