The elevated fears of a potential global recession are weighing on the global equity markets, with the Nikkei 225 Index Futures (CME: NIY) also experiencing a selloff as investors run to the safe-haven Japanese Yen. The recent economic data from the US released this week showed that the US is cooling faster than anticipated and has stoked fears of a global economic slowdown.

The strengthening of the USDJPY has been able to help the index futures limit the downside and regain some of the recent losses. The Fast Retailing Co. and Tokyo Electron Ltd., fall of 1.05% and 4.53%, respectively, could limit the index futures recovery.

Technical

Looking at the 4H chart shows that the index futures recently broke out of an ascending channel and slid below the 50-day moving average, with the index futures trading near the 50% Fibonacci level after the bears failed reach the level.

A substantial move above the 50% Fibonacci level would give the bulls the run at the 50-day moving average and the 27835 resistance level, a level of interest for the bulls. A breakout above the 23.60% Fibonacci Retracement level could indicate bullish sentiment and would bring the 28330 resistance level into play.

However, if the 50% Fibonacci level fails to hold, the bears could look to the 61.80% Fibonacci Retracement Golden Ratio as a possible level of significance. A sustained break below the Golden Ratio would bring the 26920 support level into play.

Summary

Investors could be looking to ensure they are not overexposed ahead of the US employment report on Friday. Thus, it is likely that the market remains somewhat range-bound. Nevertheless, trader reaction to the main Fibonacci level at 27270 is expected to determine the direction of the index futures’ movement during the trading session on Thursday.

Sources: TradingView, Reuters, CNBC.

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