NKY breaks back above 20-day moving average
Nikkei 225 Index (NKY) Technical Analysis Report for Mar 27, 2020 | by Techniquant Editorial Team
NKY ended the week 17.14% higher at 19389.43 after gaining ¥724.83 (3.88%) today. Trading up to ¥189.76 lower after the open, the market managed to reverse during the session as bulls took control ending the day above its opening price. Closing above Thursday's high at 19240.29, the Nikkei confirmed its breakout through the previous session high after trading up to ¥149.14 above it intraday.
Daily Candlestick Chart (NKY as at Mar 27, 2020):
Friday's trading range has been ¥557.22 (2.93%), that's below the last trading month's daily average range of ¥763.75. Things look different on the weekly timeframe, where the market's trading range of the last week has been above 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 18446.80 and 19564.38 where it has been caught now for the last three trading days.
Two candlestick patterns are matching today's price action, the White Candle which is known as bullish pattern and one bearish pattern, the Bearish Hikkake Pattern. The last time a Bearish Hikkake Pattern showed up on Tuesday, NKY actually gained 8.04% on the following trading day.
The index managed to close back above the 20-day moving average at 19079.75. Prices are trading close to the key technical resistance level at 19564.38 (R1).
Though the stock index is experiencing a short-term uptrend, this could just be a correction, as both the medium and long-term trends are still bearish.
Buying might speed up should prices move above the nearby swing high at 19564.38 where further buy stops could get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bullish Break through SMA 20" stand out. Its common bullish interpretation has been confirmed for Nikkei 225. Out of 149 times, NKY closed higher 54.36% 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 55.03% with an average market move of 0.11%.
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 -5.25% and DJIA closing -4.06% lower. On the flipside the best performer has been HSI closing 0.56% higher. Read more