[Japanese Stocks] The Nikkei Average has reached its highest level since February 21; what are the conditions for an upward breakout? | Hiroyuki Fukunaga's Technical Analysis Course That You Can No Longer Ask About | Moneyクリ MoneyCube Securities' investment information and media useful for money.

Expectations Rise for Entering an Uptrend

Despite concerns about geopolitical risks in the external environment, the Nikkei average also rounded up its stock price level due to the depreciation of the yen and the firm performance of U.S. stocks, and finally exceeded the closing price on May 29 at the close on June 17. It finished at the 38,500 yen level, the highest level since February 21.

Additionally, in trend analysis, it is considered that not only is it above all moving averages, but the 200-day moving average, which was downward until last week, has also changed to an upward trend, increasing the likelihood of a rise in trend.

Therefore, the condition for the emergence of a rise trend is whether it can maintain above the upward 5-day moving average line, which is a key point of focus. If it can maintain above the 5-day moving average line, it is possible that all moving averages will continue to rise, and a golden cross may occur where the upward 25-day moving average exceeds the 200-day moving average.

On the other hand, if the price fails to hold above the 5-day moving average and breaks below or remains below the 5-day moving average, the 5-day moving average may turn downwards and become resistance to the upside, and in some cases, it may fall below the 200-day moving average to near the May 22 low. You will need to pay attention to the timing of buying and selling. However, if the price does not break below the May 22 low at the close, it can be seen as within the range of the shares.

[Chart] Nikkei Stock Average (Daily) Source: Created by Invest Trust Co., Ltd. from i-chart The moving average periods are set to 5 days (blue line), 25 days (red line), and 200 days (gray line). *The trading volume is in the prime market. *The momentum period is set to 10 days (blue line), and the 3-day moving average of the momentum (red line) is also displayed.

The Key to Momentum Rising

In this context, looking at the momentum that tells us the strength of the rise and fall, both the momentum and its moving average line, known as the signal, are above the 0 line, which is the dividing line for assessing the strength of the rise and fall, but they are at a low level.

Therefore, this week, it is a key point to pay attention to whether the two lines can rise and raise the levels. If the momentum and signals rise and raise the levels, expectations for a breakout will increase. On the other hand, if the two lines rise but are limited or change downward and fall below the zero line without being able to recover, it is important to be cautious as it could drop below the approaching 5-day, 200-day, and 25-day moving averages, getting closer to the low set on May 22.