The Japanese 225 index hit a multi-decade high of 23,414 earlier in the day before reversing to last stand 0.9% lower relative to yesterday’s close.
Despite the decline, the index remains bullish in the short-term as indicated by technical indicators. The Tenkan-sen line being above the Kijun-sen line is a positive alignment pointing to bullish momentum in the short-term. The RSI supports this view as it has been advancing in recent days. Notice though that the indicator is currently at 75, exceeding the 70-overbought level.
The stochastics are painting a negative intra-day picture though: the %K line has crossed below the slow %D line with both lines currently heading lower.
On the upside, the area around the 23,000 mark, which was breached earlier in the day, could provide some resistance. Further above, the range around today’s multi-decade high of 23,414 might constitute an additional barrier in case of stronger bullish movement.
Should the index decline, the area around the current level of the Tenkan-sen at 22,624 might act as support. Further below, the range around the Kijun-sen at 22,004 could be significance, providing support as well.
The index has gained considerably over the last two months after in large part moving sideways in the preceding few months. It currently trades above the 50- and 100-day moving averages (MAs), as well as above the Ichimoku cloud. Both MAs are positively-sloped, while a bullish (golden) cross was recorded around mid-October when the 50-day MA moved above the 100-day one. All these are supporting a bullish medium-term picture.
Overall, the index is bullish in both the short- and medium-term though that are signs that it might be overstretched
