Strong risk appetite is the main theme in the financial markets today even though it’s not quite reflected in the forex markets. Strength in Nikkei and Yen on the same day is relatively unusual. But that could be a reflection of reactions to both Fed chair Jerome Powell’s speech, as well as Prime Minister Shinzo Abe’s announcement to seek power extension. Also, Japanese markets remain rather immune from global trade war threat.
Anyway, Nikkei’s rally since last week maintains near term bullishness. That is the development is in line with the view that price actions from 23050.39 are merely a sideway consolidation pattern. And the rally from 20347.49 is not over. The focus is now back on 23050.39 resistance. Break will confirm resumption of rally from 20347.49 and target 61.8% projection of 20347 to 23050.39 from 21851.32 at 23521.71 first. Break will likely send the index through 24129.34 to 100% projection at 24554.22. This bullish case is favored as long as 21851.32 support holds.
