The Nikkei weekly reached our goal, or the end of the current leg down, as it tested the lows of 2002. The last leg dropped around 7000 points and requires a 38% retracement at least back up to 10000. In a bigger count context as the big wave is finished, we can rather expect to see as a minimum wave up of 25% of the roughly 11000 points down which is again 2800 points from the low, but more likely a 38% retracement back to 11500 levels. After all, it's in sync with the global situation and dragged down over-proportionally by the high yen. As long as the deleveraging proceeds, it will stay under pressure. It lost as a developed country over 60% from the top with lesser domestic problems compared to the western counterparts. What keeps it down is that Funds need to buy back the Yen that borrowed to leverage positions. As for example the EURYEN chart still signals more buying interest in the pipeline - the bottom building process might take some more time.
Friday, November 14, 2008
Nikkei tech outlook
The Nikkei weekly reached our goal, or the end of the current leg down, as it tested the lows of 2002. The last leg dropped around 7000 points and requires a 38% retracement at least back up to 10000. In a bigger count context as the big wave is finished, we can rather expect to see as a minimum wave up of 25% of the roughly 11000 points down which is again 2800 points from the low, but more likely a 38% retracement back to 11500 levels. After all, it's in sync with the global situation and dragged down over-proportionally by the high yen. As long as the deleveraging proceeds, it will stay under pressure. It lost as a developed country over 60% from the top with lesser domestic problems compared to the western counterparts. What keeps it down is that Funds need to buy back the Yen that borrowed to leverage positions. As for example the EURYEN chart still signals more buying interest in the pipeline - the bottom building process might take some more time.
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