The Nikkei is finally showing signs of life with the market moving sharply lower overnight to break below both the 200-day and 63-day averages, turning the focus onto the important 21580/530 low, below which would reinforce the downswing further, economists at Credit Suisse brief.
“The Nikkei moved very sharply lower on Friday, in line with it’s recent completion of an in-range top, with the market now breaking below both the 200-day average and late June low at 21970/940, as well as the 63-day average just below.”
“After trading in a very tight range for much of July, this breakdown now reasserts the potential for a much deeper setback, with more important support seen at the June low and price gap at 21580/530. Below here would likely trigger a move to the 20575 38.2% retracement of the 2020 recovery. This anticipated weakness should be supported by the pronounced weakening we still expect in USD/JPY.”
“Near-term resistance moves to 21895/965, which we would ideally like to see cap the market to maintain the direct downside pressure. Above 22295 would likely leave the market back to trading in a sideways range.”
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