Nikkei Shows Potential Reversal Signals

The Nikkei 225 index in its daily chart exposes an ascending channel that shows the Japanese index completing a second bullish leg.

In this post, we will disclose some factors suitable for a bearish trade setup.

1. The long-term ascending channel has a similar structure that completed a bullish five-waves sequence.

2. Currently, a congestion zone is holding the Japanese index. The extension of this zone ranges between 23,330 pts and 23,635  pts. This area could act as an exhaustion zone.

3. The bearish position will activate if price breaks and closes under 23,150 pts. Our conservative scenario foresees a profit target at 22,810 pts. The second profit target level is at 22,550 pts, and the third profit level is at 22,250 pts.

4. The sell-side scenario will be invalid if the price continues rising above 23,405 pts.

5. The risk, Nikkei, remains in an uptrend. A reversal setup could be weighted if price action demonstrates weakness on the current bullish leg.

Trading Plan Summary

• Entry Level: 23,150 pts.

• Protective Stop: 23,405 pts.

• 1st Profit Target: 22,810 pts.

• 2nd Profit Target: 22,550 pts.

• 3rd Profit Target: 22,250 pts.

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