The economic data from the US and the Eurozone looked to help the Nikkei 225 Futures (CME: NIY) close off a remarkable week for the index and the stock markets in general. The soft inflation data from the Eurozone and the weaker PCE data from the US suggested that the ECB and the Federal Reserve could be afforded an option of a rate hike pause, which drove both the US Dollar and the Euro lower while driving the equity markets higher. The sentiments spilt over to the Asian markets, with the Nikkei 225 Futures looking to close a seventh trading session on the green.

The US and Eurozone economic data came in after the Japanese economic reports were released earlier today. The index futures were boosted by the Japanese government data that showed that the factory output recovered from -3.1% to -0.6%, and the retail sales for February rose to 6.6% from 5%, more than the expected 5.8%. The economic data helped the index futures advance more than 0.86% to close the week 3.16% higher.

Technical

The 4H chart shows that the index futures have recently broken above the upper trendline of an ascending channel as it continues to trend up, and the reaction of traders above the line could determine the direction in the short term. A sustained move above the breakout level could signal an extended rally, and the bulls would likely test the resistance at 28350. A breakout above the initial resistance level could signal the presence of buyers. Thus, the bulls could look to test the resistance level at 28730 but could fall short in the short term.

A failure to sustain the move above the upper trendline could pull back the price inside the channel. A pullback back to the channel could bring the support level at 27820 back into play. A continued sell-off could push the price even lower towards the next support level at 27350.

Summary

It was a great trading session for the index futures, and the bulls could be confident in continuing their rally into the following week unless there is any adverse news during the weekend. Thus, a short-term trading opportunity could exist at the bulls’ target at 28350.

Sources: TradingView, Reuters.

DISCLAIMER:This report has been prepared by our Group company. This document is not intended as an offer, solicitation or recommendation to buy or sell financial instruments or to make any investment. The Group has used reasonable efforts to obtain information from reliable sources and the report is provided without representation or warranty of any kind (neither expressed nor implied).  The Group disclaims liability for any publication not being complete, accurate, suitable and relevant for the recipient. Specifically, the Group disclaims liability towards any user and other recipients of this report.