Published at 15:27 (GMT) 09 Sep

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4CAST M/T VIEW - NIKKEI 225 - Thursday 9 September 2010 Anne Whitby

STILL LOWER TARGETS SEEN INTO Q4 (Spot ref. 9098)

NIKKEI 225 has traded sideways/lower over the past three months and although it is currently steady, there is no indication that this trend has ended. We anticipate a continuation into Q4, taking the Index to further downside targets before a final low is reached, which is expected in that quarter. Meanwhile rally attempts should remain only corrective and temporary, with clearance of the June high needed to signal an earlier improvement in the outlook.


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First, but minor, support is at 8998, 8 September low, with the important area at 8796, 1 September low. Once this gives way, expected in coming weeks, look for 8494, 28 April 2009 low, and 8085/00, 1 April 2009 low and figure. This should be the maximum downside. The March 2009 and October 2008 lows at 7021 and 6995 are not currently seen tested.

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To the upside, resistance is at 9363, 19 August high, then through congestion to 9807, 14 July high. This should not be cleared in the next few weeks. Beyond lies 10252, the June high. A break of this, seen hard and not expected till later in Q4, would be required to signal a low already in place. (Even in that event, more selling pressure is seen in the area from 10257, 7 May low, right up to 11408, 5 April high.)

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Although NIKKEI 225 has steadied a little in the last two weeks, this is seen as only temporary with rally attempts staying capped. Renewed weakness is rather anticipated, with lower targets in focus into Q4. However, we would expect to see a final low reached during this period.

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