The Nikkei 225 Index Futures (CME: NIY) bulls have their eyes firmly at the 16-month high of 29360 as the Japanese equity continues to shine amidst the weakened Japanese Yen. BoJ Governor Ueda reiterated the necessity to continue the yield curve control (YCC) after the Governor remarked on optimism about Japan’s current upward inflationary trajectory.
The better-than-expected and upbeat corporate earnings season has also aided the index futures’ resilience in the face of heightened concerns about global economic stagnation. Japan’s steel and non-ferrous sector and transportation and logistic sector companies’ excellent earnings also boosted the index to a 1% rise for May and pushed the index futures a step closer to closing the 5th consecutive month in the green.
Technical
The 4H chart shows that the market has been very bullish towards the index futures, confining the price action within an ascending channel as the bulls continue to push the price higher following the rejection of the 15th of March 2023 low of 26190. Despite the bulls’ recent failure to break above the 29370 resistance level, the bulls could be confident in their pursuit to retest the level following the rejection of the 23.60% Fibonacci retracement level.
Should the index futures’ bullish momentum persist, the bulls could look to push the price above the recent obstacle at the 29370 resistance level. The fall of the 29370 resistance level could initiate a breakout towards the next resistance level at 29560. However, should the bulls’ rally lose steam, the price could fall, and the bears will closely watch the index futures’ reaction around the lower trendline of the channel and the 23.60% Fibonacci retracement level. A break below the Fibonacci retracement level would bring the 28270 support level into play.
Failure to sustain a break below the lower trendline of the channel would keep the bullish sentiment towards the index futures firmly intact.
Summary
The index futures bulls have enjoyed significant dominance over the bears recently. Should the bullish market sentiment persist, the bulls could closely watch the 29370 resistance level for a potential breakout towards the 29560. Failure to break above 29370 would leave significant support levels in play.
Sources: TradingView, Reuters.
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