Nikkei 225 Index Gains 7.9% in a Strong Finish to the Week

The Nikkei 225 index looks set to end the week strongly after the Fed’s interest rate hike spurred renewed buying, leading to a 7.04% surge. The Fed rate hike boosted the value of the US Dollar against the Yen. The weaker Yen has made the Nikkei 225 stocks more appealing to foreign investors seeking bargains in the export-oriented economy. 

The Nikkei 225 index over the finish line in Friday’s trading showed strong showings from Mining, Power, and Transport Equipment shares. Commodity stocks such as Pacific Metals Co Ltd and Toho Zinc Co. Ltd were the biggest gainers, with the two stocks adding 8.38% and 8.09%, respectively. Mitsui Mining and Smelting Co was also a top gainer, adding 5.80% on Friday. 

Nikkei 22 Index Price Outlook

The Nikkei 225 index’s surge for the week came off a bounce on the 24481.57 support. This support level is the completion point of the measured move from the double top of 22 February 2021 and 13 September 2021. The surge took out the resistance levels at 25791.21 and 26247.00. However, it has met resistance at the 26960.42 price mark (neckline of the completed double top). The advance towards 27654.02 and potentially 28486.34 can only continue if the bulls uncap this role-reversed neckline. 

On the flip side, rejection at the neckline creates a retest potential of 26247.00. If this support is degraded, a continued decline towards 25971.21 and 24481.57 would be on the cards. Only if the latter gives way will an additional price deterioration on the Nikkei 225 index be seen, with 23691.07 being the nearest target.