The JP225 cash index has been on a decent upward move since the March 15 low of 26,457. This short-term rally appears to have halted just above the 27,423- 27,470 range set by the 38.2% Fibonacci retracement level of the March 8, 2022 – August 17, 2022 uptrend and the 50-day simple moving average (SMA). This move appears to have been the least-resistance path for the index, correcting half of the acute downward move recorded in early March.
At this juncture the momentum indicators are revealing a precarious balance. The RSI is just on the 50-threshold and the stochastic oscillator appears to be moving horizontally, which is atypical for this indicator. In the meantime, the Average Directional Movement Index (ADX) is clearly pointing to a trendless market. It is actually stuck at the lowest level since December 15, 2022, the start of the 10% correction that pushed the JP225 index to the 25,603 low.
If the bulls maintain the market reins, their first target would be at the February 6 high of 27,852. Even higher, the 23.6% Fibonacci retracement at 28,113 could prove tougher to clear, just below the June 9, 2022 high of 28,394.
Should the bears regain market control, they would face the 38.2% Fibonacci retracement level and the 50-day SMA at the 27,423- 27,470 range. Then, the twin 100- and 200-day SMAs at the 27,355-27,366 area could put up a stronger fight. If this range is broken, the path would be clear until at the 50% Fibonacci retracement level of 26,866.
To conclude, the JP225 bulls have been enjoying a nice upleg, but the technical picture appears to be balanced now.
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