From around the beginning of November, Nikkei 225 has been moving lower, forming lower highs, which led to the formation of a short-term downside resistance line taken from the high of November 7th. That said, overall, the index is still balancing above its medium-term upside support line drawn from the low of August 25th. As long as the price remains between the two lines, we will stay neutral and wait for a breakout first, before examining a further directional move.
If the previously-mentioned downside line breaks and Nikkei 225 makes a run above the 23652 barrier, marked by the current highest point of November, this would confirm a forthcoming higher high and more buyers could be joining in. This is when we will start examining a possible test of the 24039 hurdle, which if broken may clear the path to the 24478 level. That level is highest point of October 2018.
Looking at our oscillators on the daily chart, the RSI and the MACD, both have topped in the beginning of the month and moved slightly lower. But lately, they have started pointing higher again. The RSI is still above 50 and the MACD, despite being below its trigger line, is still well above zero. Both indicators support our neutrality for now, but keep the possibility of seeing some higher levels in the near future.
Alternatively, if the aforementioned upside line breaks, this might spook the bulls from the field and allow more bears to join in, especially if the price falls below the 22655 hurdle, which is the low of October 31st. A further move lower might bring the index to the 22400 obstacle, a break of which could open the door for a slide to the 21886 level, marked by the low of October 14th.
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