The Nikkei 225 and Asian shares higher markets edged up higher on Tuesday, as US President Donald Trump signed off on two US-Japan trade agreements. However, cautious trading was the hallmark of today’s trading ahead of the much anticipated U.S.-China trade talks. These talks will kick off on Thursday.
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The Nikkei 225 index was up by 1.1% to 21,611.90 points, while the ASX 200 index in Australial was boosted by 0.5% to 6,593.40. The KOSPI in South Korea was up by 0.9% to 2,040.25 points. Shares in China were also up, as the Shanghai Composite Index and CSI 300 gained 0.5% and 0.9% respectively, to close at 2,920.71 and 3,849.19 points (CSI 300). Hong Kong’s Hang Seng index was not left out either, as it closed at 25,992.13 points, posting a gain of 0.7%.
However, the Nikkei 225 futures asset has given up some of the gains of the day, and is now trading around 21450 points.
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Technical Outlook for Nikkei 225
The Nikkei 225 futures asset continues its uptrend move after a retracement to the 38.2% Fibonacci price level. The asset bounced on the 50% Fibonacci line (swing low of August 26 to swing high of September 19). This bounce aligned with the cross of the oscillator lines at oversold levels; a bullish signal.
Yesterday’s market activity saw a boost in the value of the Nikkei 225 as investors were pleased with the trade headlines of yesterday. However, the uptick continues to remain chequered, reflecting the cautious sentiment. Going forward, I expect the US-China trade talks to guide the movement of this asset.
The price targets I posted in my previous article remain. The initial upside target lies at 21672.81, which is resistance formed by the July 12/July26 highs (23.6% Fibonacci level). Above this price level, 21847 (July 1 and July 25 highs) continues to remain the second upside target. These are the price targets to aim for if the trade headlines continue to remain positive. Such headlines will also be good for Asian shares.
On the flip side, a return of risk-off sentiment from disappointing trade-related headlines from the US-China talks could trigger a renewed selloff. This could cause price activity to retest 21053 (50% retracement) as initial target. Below this level,the 61.8% Fibonacci level (20774), which also features the multi-day highs of July and August 2019, remain relevant if any selloff takes the Nikkei 225 below the initial support at 21053.