The JP 225 stock index has seen a reversal of more than half of its July-August losses, indicating a potential bullish trend in the short term. Despite a downturn in the stochastic oscillator, the RSI and MACD are showing positive signs, with the RSI gradually moving upwards and the MACD remaining positively charged. The price itself has also crossed above the middle Bollinger band, suggesting a positive momentum.
Challenges Ahead for Bulls
While there are positive signals indicating a potential upward trend, there are also challenges that the bulls may face. The 50-day SMA at 38,600 and the 39,500-39,950 resistance zone could pose as barriers for the index. If these levels are breached, the price may face further resistance at the 41,147-41,500 zone, making it difficult for the bulls to push the price higher.
Potential Bearish Scenario
On the flip side, if the price drops below the 200-day SMA at 37,435, it could indicate a bearish scenario. The 20-day SMA at 36,600 and the 35,300 region could act as support levels, but a violation at these levels could push the price back into the 33,585-33,130 floor. This scenario could erase the gains made during the recovery trend and lead to a downward spiral for the index.
While there are positive signals indicating a potential recovery trend for Japan’s 225 index, there are also challenges and potential risks that the bulls may face. The index may continue its upward momentum in the near future, but whether it will surpass the 38,600-39,950 territory remains uncertain. Traders and investors should closely monitor key levels and indicators to gauge the strength of the current trend and be prepared for any potential reversals in the market.