The JP225 cash index is edging higher today, as the bulls are trying to recapture the 30,711 level and keep up the pressure. A short-term consolidation at the current levels could be beneficial for both sides following the steep increase since May 11.
The bears though might be able to finally crack a smile when examining the momentum indicators. The Average Directional Movement Index (ADX) appears to have topped, signaling that the bullish trend in place since the March 15, 2023 low might be over. Similarly, the stochastic oscillator has moved below its moving average and is ready to exit its overbought territory. That would potentially be a strong bearish message.
If the bearish pressure increases, the bears would quickly like to break the 30,711 level and target the busier 29,733-29,967 area that is defined by the 23.6% Fibonacci retracement level of the March 8, 2022 – May 23, 2023 uptrend and the November 16, 2021 high. Even lower, the August 17, 2022 and January 14, 2021 highs at 29,229 and 28,976 respectively should prove tougher to overcome.
If the bulls decide to ignore the mixed technical signs, they will most likely have to keep the JP225 index above the 30,711 level. The next step would be to retest the May 23, 2023 high at 31,349 and aim to record another all-time high.
To conclude, JP225 index bulls are keen on recording a higher high, but the overall technical picture is ready to turn overwhelmingly against them. The bears appear ready to capitalize on these signals, but a decisive move lower is needed to reverse the medium-term bullish trend.