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Nikkei 225 Retreat From Seven-Month Highs As JPY Rise

Nikkei 225 index retreat today after three straight days of gains that drove the index to seven-month highs. Investors took some profits off the table as export companies are under pressure amid the recent Yen strength against the greenback. Yoshihide Suga won the ruling party leadership election, and he will be the next Prime Minister of Japan. Suga considered by analysts as market-friendly and might support Japanese stocks. 

China Retail Sales Return to Growth

Wall Street managed to rebound yesterday, after the sharp correction the previous week. Positive economic data from China also support the investor’s sentiment. China retail sales return to growth for the first time since February as increased by 0.5% in August, compared to the previous year. Industrial production also rose by 5.6% in August, showing that global demand is picking up. 

Bank of Japan and Fed Decisions In Focus

Investors will focus on the Federal Reserve decision on Wednesday and the bank’s projections for the U.S. economy. Bank of Japan will announce its monetary policy decision on Thursday. 

SoftBank retreated today after the strong rally yesterday. Tokai Carbon, Concordia Financial, Shinsei Bank and CyberAgent are among the top performers in Nikkei 225

Nikkei 225 Analysis

Nikkei 225 finished 0.44% lower at 23,454 in a healthy correction from seven-month highs that hit yesterday. The bulls are in control of the Nikkei index as long as it stays above the 50-day moving average. Minor resistance for Nikkei 225 stands at 23,477 the daily high. More selling pressure would emerge at 23,554. Above that resistance, the high from February 6, at 23,837 would provide the next supply zone.

On the other hand, support for the Nikkei 225 index stands at 23,351 the daily low. Next support level to watch is at 23,117 the low from September 11. Bullish momentum would be cancelled if the index breached below the 50-day moving average at 22,859. 

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Nikkei 225 Daily Chart

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