Nikkei 225 has potential to reach new YTD highs above 30715 – Credit Suisse

Nikkei 225 has recovered back above key support at 27325/270 and may be building a bullish continuation pattern. Economists at Credit Suisse think the Japanese stock index could surge as high as 32115/20.

Potentially building a bullish continuation pattern

“We see resistance next at 28695, before the more important July high at 28850.”

“A true game changer would be a rise above the February downtrend, which is currently hovering at 29200/95 and then the recent June high at 29480 as this would suggest we are witnessing the completion of a large bullish continuation pattern to expose the 30715 YTD high and then long-term retracement resistance at 32115/20.”

“Ideally, the 200-day average currently at 28285 floors any near-term setback. Only a sustained move below the August low at 26955 though would be seen to mark a top to warn of a more concerted correction, which is not our base case.”