After an aggressive selloff that pushed Japan 225 (Nikkei) into oversold territory, the index printed a solid bullish reaction off the 30,500 key zone. This area aligns with prior demand and offers a clean invalidation level for long positioning. With heavy bearish sentiment already priced in, I’m positioning long with TP near the premium zone around 40,000.
The fundamental picture may be stormy, but technically, this is a textbook reversal play, I’m ready to ride it.
Technicals:
• Price reacted from major support around 30,500–30,800 zone, a level that held in the past.
• Daily imbalance filled, creating the perfect spot for a potential rebound.
• Descending channel break on lower timeframes indicates early bullish structure shift.
• Target zone: 39,000–40,000.
• SL: Below recent swing low, respecting tight risk management.
Fundamentals:
• Global Risk-Off Sentiment: Recession fears and tariffs pushed risk assets lower — Nikkei included.
• Tariff-Driven USD Weakness: US tariffs created uncertainty and drove global equity selloffs. However, hopes for a US-Japan trade deal are increasing, favoring the JPY and supporting Japanese equities.
• BOJ-Fed Divergence: BoJ is expected to raise rates due to broadening inflation, while the Fed is seen cutting rates soon. This differential supports capital inflows into Japan.
• Flight to Safety: Japan’s stable economy and improving policy outlook make it attractive as global volatility increases.
The selloff may have been excessive due to panic over macro headlines. However, price structure tells its own story, and it’s hinting at a bullish reversal. With multiple technical and fundamental confluences lining up, this is a well-balanced long opportunity with clear risk parameters.
Note: Please remember to adjust this trade idea according to your individual trading conditions, including position size, broker-specific price variations, and any relevant external factors. Every trader’s situation is unique, so it’s crucial to tailor your approach to your own risk tolerance and market environment.
The fundamental picture may be stormy, but technically, this is a textbook reversal play, I’m ready to ride it.
Technicals:
• Price reacted from major support around 30,500–30,800 zone, a level that held in the past.
• Daily imbalance filled, creating the perfect spot for a potential rebound.
• Descending channel break on lower timeframes indicates early bullish structure shift.
• Target zone: 39,000–40,000.
• SL: Below recent swing low, respecting tight risk management.
Fundamentals:
• Global Risk-Off Sentiment: Recession fears and tariffs pushed risk assets lower — Nikkei included.
• Tariff-Driven USD Weakness: US tariffs created uncertainty and drove global equity selloffs. However, hopes for a US-Japan trade deal are increasing, favoring the JPY and supporting Japanese equities.
• BOJ-Fed Divergence: BoJ is expected to raise rates due to broadening inflation, while the Fed is seen cutting rates soon. This differential supports capital inflows into Japan.
• Flight to Safety: Japan’s stable economy and improving policy outlook make it attractive as global volatility increases.
The selloff may have been excessive due to panic over macro headlines. However, price structure tells its own story, and it’s hinting at a bullish reversal. With multiple technical and fundamental confluences lining up, this is a well-balanced long opportunity with clear risk parameters.
Note: Please remember to adjust this trade idea according to your individual trading conditions, including position size, broker-specific price variations, and any relevant external factors. Every trader’s situation is unique, so it’s crucial to tailor your approach to your own risk tolerance and market environment.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.