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Japan 225 Stock Index Posts Bullish Trend After A Failure Swing

The Japan 225 stock index failed to post a lower low on September 11 and confirmed a failure swing on September 12 when it picked above 19737, which extended to an uptrend, sending the index to a multi-month high of 20624 on October 3. Bias in the short-term and the medium term is bullish according to technical indicators.

The RSI and the MACD signal a bullish picture in the short-term, with both technical indicators fluctuating far above their neutral zones. Particularly the RSI is above 50 and marginally below overbought area, while the MACD is above zero and its signal line. Moreover, the fact that the index is trending above the 20-day Exponential Moving Average and the Ichimoku cloud point to a bullish bias as well.

Should the index continue rising, the August 9, 2015, top of 20935 could act as a resistance before the psychological levels 21000 and 23000 come into view.

Otherwise, if the index pulls back, an immediate support could be found at 20223, which was repeatedly tested in the second half of September. Further downside movements from here, would turn the bullish bias into neutral one and target the top of the Ichimoku cloud at 19781. A break below the August 29 bottom of 19040 would see a resumption of the downtrend started on July 11.

Turning to the medium term, the index is likely to follow a bullish path as the bullish cross between the 20 and the 50-day EMA is still in place and both EMA lines are trending up.

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