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NK225M1! trade ideas

Navigating the Nikkei 225: A Pivotal Moment for TradersNavigating the Nikkei 225: Key Technical Indicators Suggest a Pivotal Moment for Traders By Eric Lee , Sales Director of Phillip Nova The Nikkei 225 index is currently at an inflection point, with several technical indicators pointing to a tug-of-war between buyers and sellers. Technical Indicators to watch out for: 1. GBP/JPY: The GBP/JPY currency pair had shown strong correlation to Nikkei225. Given the range-bound nature of both GBP/JPY and Nikkei 225 since August 14, 2024, a breakout in either could signal a similar move in the other. 2. Volume Profile Analysis: The volume profile indicator for the Nikkei 225 had suggested a resistance zone between 38,000 and 38,500, where trading volume has been concentrated. This suggests that there may be significant selling pressure at these levels. The next major resistance level is at 40,000, a psychological barrier that has historically acted as a cap on upward movements. On the downside, a minor support is observed around the 36,000 level, which could serve as a cushion in case of a downturn. 3.Stochastic Oscillator: The stochastic oscillator is currently hovering in the overbought region, indicating that the index might be due for a correction or at least a pause in its recent upward trajectory. Since the start of 2024, Stochastic at overbought and oversold levels had offered good signals in term of market timing. Trading Strategy Insights: Preparing for Breakouts or Breakdowns Traders can consider keeping an eye on the GBP/JPY currency pair, as its movements could provide valuable clues about the next direction for the Nikkei 225. Price action wise, a breakout of Nikkei225 above 38,500 could pave the way toward the 40,000 resistance level, while a breakdown below 38,000 could signal further declines to next support level of 36,000. Trade Nikkei 225 with Phillip Nova now.
SGX:NK1!
by phillip_nova
Nikkei rebound inline with expectations- Where Next?By Danish Lim Zhi Lin, Investment Analyst Current Performance of SGX Nikkei 225: The Nikkei 225 Index looks to have recovered from a dreadful start to the month where the Nikkei 225 Index plunged -12.40% on a single day on 5 August due to an unfavourable combination of carry trade unwinding, tighter BOJ monetary policy, and US recession fears. Since then, the index has rallied by over 20%. As mentioned in the previous post , this recovery was in-line with our forecast as we expected the BOJ to tread more carefully regarding monetary policy moving forward. At the same time, the importance of the increase in real wages, the first in 27 months, cannot be understated, as we view it as a key ingredient of the long sought-after wage-price cycle that will support consumer spending and boost sentiment. Lastly, US recession fears have eased following upbeat retail sales data and CPI readings that met estimates. Markets are now pricing in 100bps of rate cuts by year-end (CME FedWatch Tool). Japan seeing Green Shoots Japan Q2 GDP expanded by 3.1% QoQ, well above estimates of 2.3% and a notable increase from the previous reading which showed a decline of -2.3%. Growth was led by private consumption, which rose 1.0% vs estimates of 0.6%. Business spending also rose 0.9% vs estimates of 0.8%. This fuelled optimism that a virtuous cycle linking rising wages to increased spending may be emerging, helping spur stable demand-led inflation. Other developments BOJ deputy governor Shinichi Uchida played down any further chances of a rate hike, stating that recent market moves were “extremely volatile” and that they won’t raise rates when the market is unstable. Japan PM Fumio Kishida stepped down from his position and said he will not seek re-election on 14 August, paving the way for the ruling party to vote on his successor on September 27. The Yen moved slightly higher following his decision. It appears that the timing of the decision came as a surprise but the decision itself may not have been much of a surprise, given Kishida’s unpopularity and poor public support. Investors will be watching the leadership change closely and its potential implications on the Yen. Although we believe greater emphasis will be placed on the BOJ’s monetary policy. Nikkei 225 Outlook & Trading Opportunity: With the key downside catalysts having eased, we expect markets to re-focus on the medium- to long-term fundamentals that provide support for Japan. Private spending and consumption are likely to continue gaining momentum. The recent strengthening of the yen may also help soothe consumers’ concerns about imported inflation, with the Yen recently gaining amid expectations for the US-Japan interest rate differential to narrow as the Fed responds to cooling inflation and a slowing job market with rate cuts as early as September. Expressing Our View: We maintain our trade setup below to express our view: Long SGX Nikkei 225 Index Futures Based on a Fibonacci Extension drawn from the March 2023 low to the July 2024 high, the daily chart shows the contract having bounced back up from the 5 August low of 30,515 to around the 0.500% extension level at 38,185 as of noon on 20 August. Several technical indicators support our bullish bias: - The MACD line is shown to have crossed over the signal line. - The MACD histogram is also in positive territory. - RSI is not in overbought territory of 70 Entry is set at our previous target price of 37,870. We see near-term resistance at the 0.500% extension level at 38,650. If this level is breached, the contract could push higher towards the 0.618% extension level at 40,565. We set our target price at 42,000, close to the all-time high set by the index in July 2024. • Entry Level: 37,870 (Previous target that was hit) • Target Level: 42,000 • Stop Loss Level: 36,000 • Profit at Target: 3020 x ¥500= ¥2,065,000 • Loss at Stop: 1750 x ¥500= ¥935,000 • Reward: Risk Ratio: 2.21x Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now with Phillip Nova. *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by MAS.
SGX:NK1!Long
by phillip_nova
Navigating the Nikkei225's VolatilityNavigating the Nikkei225's Volatility: BOJ's Rate Hike, Market Reactions, and Future Implications By Eric Lee , Sales Director of Phillip Nova BOJ’s Surprise Rate Hike and the Initial Market Reaction After Bank of Japan surprised the market by increasing its interest rate by 0.25% on 31 July and BOJ Gov. Kazuo Ueda said at a news conference then of the possibility of further rate hikes, it sent Nikkei225 into a sharp dive, falling 8000 over points in less than a week. Compounding Factors: U.S. Employment Data and Middle-East Tensions To be fair, a confluence of other factors such as bad U.S. employment data and fear of Middle East conflict expanding into a full-out war between Iran and Israel, probably added fuel to the sharp decline. Yet, BOJ got the bad press for it as the rapid unwinding of Yen carry trades caused a selling down in the global markets as well as investors fled to safe haven assets such as bonds and gold. www.reuters.com The Yen Carry Trade Unwinds: A Global Market Phenomenon In a turn of events, BOJ Deputy Gov. Shinichi Uchida, in contrast to Ueda’s hawkish comments the previous week, then assured the market that they will not be hiking rates when market is unstable. Since then, Nikkei225 rebounded to the current level of 36,000.` Nevertheless, the can of worms had been opened, and market had woken up to their complacency of the Yen carry trade problem, and in view of the expectation of rate cut by Fed in September, global investors may make use of the rebound to continue unwind their carry trades, which may add some selling pressure in Nikkei225 and GBP/JPY. Looking Ahead: Potential Continued Pressure on Nikkei225 and GBP/JPY In my previous post, I’ve introduced referring to GBP/JPY as a proxy on the strength of Nikkei225 due to their correlation. From the attached 4-hourly chart of Nikkei225, we can determine that the resistance levels are around 38000 and 41000, based on the concentration of trades done around those levels, as highlighted by Volume Profile indicator. Short-term traders can refer to MACD indicator and GBP/JPY to signal them on the possible change of trends on the 4-hourly chart. Trade Nikkei 225 at only 50 cents* now
SGX:NK1!Long
by phillip_nova
Hey mates! What just happened? What happens next?Why Has the Equities Market Tanked? Several factors have contributed to the recent decline in the equities market. One significant factor is the impact of the Bank of Japan's (BOJ) actions. Although the BOJ has only recently begun to raise rates, with the overnight rate currently at just 0.25% compared to around 5.5% for dollar rates, its move has triggered substantial turbulence. Specifically, global stock and bond markets, particularly in Japan, are being unsettled by the unwinding of the yen carry trade. Understanding the Yen Carry Trade The yen carry trade involves borrowing yen at a low interest rate to invest in currencies and assets that offer higher yields. This trade has been particularly popular due to Japan's historically low rates. Investors use borrowed yen to purchase higher-yielding currencies and invest in assets like bonds. The typical annualized returns on dollar-yen carry trades are around 5%, reflecting the difference between U.S. and Japanese rates, with additional gains possible if the yen depreciates. The yen carry trade has its origins in 1999, following Japan's policy rate cut to zero after the burst of its asset price bubble. The scale of this trade is substantial, though not precisely measured. Analysts estimate that Japanese banks have about $350 billion in short-term external loans related to yen-funded trades. This estimate likely underrepresents the true scale due to leverage used by hedge funds and computer-driven funds. Japanese pension funds, insurers, and other investors have significant foreign investments, with Japan's foreign portfolio investments totaling approximately ¥666.86 trillion ($4.54 trillion) as of March. More than half of this is in interest rate-sensitive debt assets, most of which are long-term. Recent discussions about potential further rate hikes in Japan and anticipated rate cuts by the Federal Reserve have led to a 13% increase in the yen over a month and reduced the yield gap. This has wiped out the modest gains from yen-dollar carry trades. Consequently, investors with large, leveraged yen carry positions are forced to de-leverage, leading them to sell off other stock and bond holdings. www.cnn.com Current Market Conditions and Implications Despite these market upheavals, there are bullish factors to consider. Recent weakening in U.S. unemployment data, coupled with a growing U.S. deficit, suggests that rate cuts might be on the horizon. Additionally, the recession, which many overlook, has already affected debt-intensive sectors of the market. However, sectors with less reliance on debt have not been as severely impacted. The increase in multiple job holdings indicates that high interest rates have had a more nuanced effect. Furthermore, the Treasury Department's buyback programs, authorized under Section 3111 of Title 31 of the United States Code, play a crucial role. These programs include: Cash Management Buybacks: Aimed at reducing volatility in Treasury's cash balance, minimizing disruptions in bill supply, and lowering borrowing costs over time. treasurydirect.gov Liquidity Support Buybacks: Intended to enhance market liquidity by offering regular opportunities for market participants to sell off-the-run Treasury securities. The combination of these programs and the BOJ's likely pause on further rate increases, along with anticipated domestic rate cuts, creates a potentially bullish environment. www.wsj.com Moreover, the recession indicators are strong : aside from the ongoing inverted yield curve the Manufacturing PMI is contracting at 46.8 , marking its fourth consecutive month of decline. www.ismworld.org Any PMI reading under 50 is indicative of contraction. The PMI also reflects that New orders have also dropped to 47.4 . Despite Prices growing for seven months, the overall economic picture shows severe weakness in manufacturing and transportation sectors, with trucking rates at recessionary levels, when including inflationary cost pressures, not seen since 2009 . www.dat.com Federal Reserve and Treasury Department Actions The Federal Reserve's policy of "beyond maximum employment" suggested that job losses were acceptable to combat inflation. However, the Fed's actions often appear reactive rather than proactive. With Treasury Secretary Janet Yellen's announcement of the U.S. Treasury Quarterly Refunding and the planned injection of $300 billion to $1.05 trillion by year-end , the outlook includes both anticipated rate cuts and substantial Treasury market support. treasurydirect.gov During the second quarter of 2024, U.S. economic data indicated robust growth in output and labor markets, even as inflation slowed. Real GDP growth accelerated to 2.8% from 1.4% in the first quarter, driven by increased private consumption, business investment, and government spending, particularly in national defense. While payroll job growth slowed and the unemployment rate edged up to 4.1%, it remains historically low. Inflation, measured by the consumer price index, slowed to 3.0% from a peak of 9.1% in June 2022. PCE inflation also approached the Fed's target of 2%, while housing markets showed mixed signals. Optimal Capital Deployment: Focus on Cryptocurrency In light of recent market dynamics, the cryptocurrency market presents an intriguing opportunity for capital deployment. Despite the severe downturn in the altcoin market, Bitcoin has shown resilience, bolstered by several positive developments. This includes the resolution of the Mt. Gox distribution issue and the alleviation of selling pressure from the German government. Moreover, a significant catalyst has emerged with the People's Bank of China (PBOC) cutting key interest rates, which could have far-reaching implications for global markets and, notably, for cryptocurrencies. www.cnbc.com Catalysts for the Crypto Market China's Interest Rate Cut: The PBOC’s recent decision to cut key interest rates is an additional bullish catalyst. China's equity market has felt severe pain. China just announced a reduction in the seven-day reverse repo rate from 1.8% to 1.7%, alongside improvements in open market operations. Additionally, benchmark lending rates were lowered: the one-year loan prime rate (LPR) dropped from 3.45% to 3.35%, and the five-year LPR fell from 3.95% to 3.85%. This action, which precedes any Federal Reserve rate cuts, reflects China's proactive stance to counteract economic weakness and a housing market crisis. This move signals a potential boost for global growth and could positively impact asset classes like cryptocurrencies. www.nytimes.com Current Market Conditions: The broader global recession, often only recognized in hindsight, sets the stage for a potential economic rebound. Recessions, while challenging, can lead to recovery phases where the economy "catches up" to previous projections. Although recessions vary in duration and impact across different sectors, they often follow cyclical patterns of peaks and troughs. In the current climate, where various sectors experience disparate impacts, capital deployment in sectors poised for recovery could yield significant returns. K-Shaped Recession and Sector Variability: The present economic environment suggests we might be witnessing yet another K-shaped recession. This type of recession features divergent recovery paths for different segments of the economy. Some sectors may rebound swiftly, while others may face prolonged struggles. The COVID-19 pandemic-induced recession, for example, displayed K-shaped characteristics, with technology and remote work sectors rebounding quickly, while industries like in-person dining and live entertainment lagged. In the current cycle, similar divergence is evident. For instance, transportation sector pricing varies significantly even in-sector: international container shipper rates are surging, while less-than-truckload (LTL) rates remain relatively stable, and full-truckload (FTL) rates have sharply declined. Such disparities highlight the importance of identifying sectors and assets likely to benefit from upcoming economic shifts. www.cnbc.com Why Cryptocurrency Could Be the Next Big Opportunity Given the current economic environment and sectoral variations, the cryptocurrency market appears to be a promising area for investment. Despite recent setbacks in the altcoin market, Bitcoin's stability and recovery potential, coupled with the positive effects of global economic policies, create a bullish outlook for crypto assets. The forthcoming economic recovery phase could see significant growth in the cryptocurrency sector, driven by both institutional interest and broader market acceptance. For those seeking a solid and reliable investment with long-term prospects, Bitcoin (BTC) and Ethereum (ETH) are currently the top choices. The inflows and education of ETH is only starting, and Bitcoin is only now or soon to be recommended by quality wire houses like Bank of America Merrill Lynch, Wells Fargo, and quality ones like Morgan Stanley. www.investopedia.com Specifically, if you’re planning a long-term hold, consider stETH or cbETH, which offer strong potential and stability in the Ethereum ecosystem will picking up that passive staking yield. For investors with a higher risk tolerance who are looking for potentially significant rewards, I continue to be bullish on Solana (SOL). Solana’s innovative technology and growth potential make it an appealing choice for those willing to embrace volatility for the chance of substantial returns. For extreme risk-reward scenarios, I highly recommend ONDO. ONDO is at the forefront of revolutionizing financial infrastructure by tokenizing US Treasuries on the Ethereum and Solana blockchains. They offer a US Dollar yield of 5.35% APY and have achieved over half a billion in Total Value Locked (TVL). With investments managed by top-tier bond managers and a team with expertise from firms like BlackRock, Goldman Sachs, Bridgewater, and Millennium, ONDO is a standout in the crypto space. However, be mindful of ongoing emissions of ONDO tokens, which involve a daily linear unlock of 0.001% of the maximum supply over a five-year period. This feature may impact the market dynamics, so proceed with caution and stay informed. In summary, for a balanced approach, BTC and ETH (particularly stETH and cbETH) offer stability ( relative to the crypto market ) and high growth potential. For those seeking higher returns with a tolerance for risk, SOL is a promising option. And for those willing to engage in high-risk, high-reward strategies, ONDO presents an innovative opportunity with significant upside potential. Good luck, and may your investments bring great success! So mates, while traditional sectors and markets exhibit mixed recovery prospects, the cryptocurrency market stands out as a potentially lucrative opportunity for capital deployment. With key economic indicators signaling a forthcoming rebound and structural issues in other asset classes, cryptocurrencies could emerge as a leading investment choice in the next economic cycle.
CME:NKD1!Long
by ZenMode
8
Navigating Volatility in Japan; LT Fundamentals UnchangedBy Danish Lim Zhi Lin, Investment Analyst Current Performance of SGX Nikkei 225: The Nikkei 225 Index plunged -12.40% on 5 August, its steepest single-day decline since 1987. Investors fled equities as a stronger yen hammered export stocks, tighter monetary policy led to an unwinding of carry trades, US recession fears, and a rotation out of Tech amid “AI bubble” concerns. While the decline was broad, Tech was particularly hard hit, with stalwarts like Softbank Group (-18.66%) and Tokyo Electron (-18.48%) down by nearly 20%. This is important as Tech has roughly a 49% weightage in the Nikkei 225 index, meaning a decline in Tech has an outsized effect on the index. Nevertheless, the index rebounded on 6 August. The SGX Nikkei 225 Index Futures contract rallied by 9.21%. We attribute this rebound to strong overnight US Services data that provided comfort economic growth could hold, easing recession fears. Thus, it seems apparent that US recession fears will take center stage moving forwards Dovish BOJ On 7 August, the SGX Nikkei 225 Index closed up by 1.19% as BOJ deputy governor Shinichi Uchida sent a dovish signal to markets, likely with the intention of stemming panic selling. He stated that recent market moves were “extremely volatile” and that they won’t raise rate when the market is unstable. Uchida added that the US economy is likely to have a soft landing and that the rate trajectory will shift if market moves affect the overall. Currency stability, US recession, and market volatility, are all key factors that will determine the path ahead for Japanese equities. The BOJ will likely proceed with more caution for future rate decisions. Unwinding of Carry Trades The elephant in the room is the ongoing unwinding of carry trades. A carry trade typically involves borrowing the lower-yielding yen and investing that borrowed money into higher yielding assets. Because of the BOJ’s recent rate hike which led to yen appreciation, and the potential for more rate cuts by the Fed due to recession fears, carry returns have seen a decline as interest rate differentials narrow. As carry trades get liquidated, traders will have to buy back yen to repay loans taken to fund the carry trade, traders may also sell off assets, including stocks, to cover their positions. Positives On the bright side, recent data showed an increase in real wages for the first time in 27 months. This could have contributed to the rebound in Japanese equities as traders saw hope that a virtuous wage-price cycle could emerge to support consumer spending and sentiment. Japanese households have also poured 7.5 trillion yen ($52b) of funds into new tax-free investment accounts called NISA during 1H 2024, according to Japan Securities Dealers Association. Should costs ease and real wages continue to grow, we expect domestic demand recovery to be the next key growth catalyst for Japanese equities. However, over the coming months, until recession fears recede and USD/JPY stabilizes, Japanese equity momentum could be limited due to the re-pricing of recession risks and the unwinding of carry trades. Nikkei 225 Outlook & Trading Opportunity: Volatility is likely to remain elevated due to the unwinding of carry trades and US recession fears which we believe are in the process of being priced-in. With the selloff bringing prices back down to more reasonable levels, we could see dip-buying provide temporary support to the market. Expressing Our View: We maintain our trade setup below to express our view: Long SGX Nikkei 225 Index Futures Based on a Fibonacci Retracement drawn from the October 2023 low to the July high, the 4 hourly chart shows the contract having broken below the 0.786% retracement level before bouncing back to around the 0.618% level at around 35,000 as of market close on 7 August. Based on the Moving Average Convergence Divergence Indicator (MACD), we maintain a long bias on the contract as: - The MACD line is shown to have crossed over the signal line. - The MACD histogram is also in positive territory. Entry is set at assumed market price of 34,850, although we prefer to enter on dips. We favour a 5% trailing stop loss to protect gains and limit losses amid elevated volatility. This brings us to a trailing stop at ~33,100 (roughly 5% below market price). We see near-term resistance near the 50-day moving average and 0.500% retracement level at 36,435. If this level is breached, the contract could push higher to the 0.382% retracement level at near 37,870. • Entry Level: 34,850 (Market) • Target Level: 37,870 • Stop Loss Level: 5% Trailing Stop loss at 33,100 • Profit at Target: 3020 x ¥500= ¥1,510,000 • Loss at Stop: 1750 x ¥500= ¥870,000 • Reward: Risk Ratio: 1.73x Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan. Learn more here . *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by MAS
SGX:NK1!Long
by phillip_nova
Japan NKD1!I definitely don't trade this and only looked at it for 5 minutes, mainly because people are blaming Japan for our little flash crash. NKD1! demolished a handful of clear breakouts that needed backtesting and a major weekly trendline in order to get this thing some juice. Will it hold or is this just a short squeeze? After all, they do need buyers and buyers don't buy much when they are panicking. They buy when they are euphorically bullish and there is a lot of room to the top. Clearing $36,300 would be a step in the right direction. Until then I am on guard with all markets. The global instability is real and like it or not, Bidenomics fuckin sucks. EDIT: you can disregrard the MACD and RSI, didn't know those were on there and frankly didn't look much at them although RSI bearish and that was a big fat false breakout of prior all time high.
CME:NKD1!Short
by BartChartski
Elliott Wave Intraday Analysis Expecting Nikkei (NKD) to Extend Short Term Elliott Wave in Nikkei (NKD) suggests the Index shows short term incomplete bearish sequence from 7.10.2024 high favoring further downside. Decline from 7.10.2024 is in progress as a double three Elliott Wave structure. Down from 7.10.2024 high, wave (W) ended at 37395. Rally in wave (X) ended at 39318 with internal subdivision as a zigzag structure. Up from wave (W), wave A ended at 38785 and wave B ended at 37395. Wave C higher ended at 39318 which completed wave (X) in higher degree. The Index has turned lower in wave (Y) with internal subdivision as a zigzag structure. Down from wave (X), wave ((i)) ended at 37405 and wave ((ii)) ended at 38010. Wave ((iii)) lower ended at 36465 and wave ((iv)) ended at 36920. Final leg wave ((v)) ended at 36165 which completed wave A in higher degree. Wave B rally is in progress to correct cycle from 7.31.2024 high before it turns lower. Near term, while below 39318, expect rally to fail in 3, 7, or 11 swing for further downside. Potential target lower is 100% – 161.8% Fibonacci extension of wave (W). This area comes at 30932 – 34135 where buyers can appear for further upside, or 3 waves rally at least.
CME:NKD1!
by Elliottwave-Forecast
Navigating the Key Technical Levels and Upcoming BOJ DecisionBy Eric Lee , Sales Director from Phillip Nova The Nikkei 225 index is currently trading near its 200-day moving average (200D-MA), a crucial technical indicator that often signifies long-term market trends. At the same time, the index is hovering around the 37,000 level, a significant support that has held firm multiple times in the past. Technical Indicators: 1. 200-Day Moving Average (200D-MA): The 200D-MA is trending upwards, underscoring a long-term bullish sentiment. The index's proximity to this moving average suggests it is at a critical juncture where historical trends show potential for support. 2. Support at 37,000: The 37,000 level has acted as a robust support point, providing a floor during previous price corrections. This level coinciding with the 200D-MA enhances its significance as a potential stronghold for the index. 3. Stochastic Oscillator: Currently, the stochastic oscillator is in oversold territory (below 20). Historically, when the stochastic oscillator is oversold and the index is near the 200D-MA, it has often indicated strong support, leading to subsequent price rallies. Impact of the Bank of Japan’s Policy Decision A potential catalyst that could influence the Nikkei 225’s movement is the upcoming policy decision by the Bank of Japan (BOJ). The BOJ is considering raising interest rates to 0.25%, a move that could significantly impact market sentiment. Investors should closely monitor the BOJ's announcements, as changes in interest rates can lead to increased market volatility and affect the index's performance. (asia.nikkei.com) Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan. Learn more here . *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by MAS
SGX:NK1!Long
by phillip_nova
Tech Rotation Presents a Buying Opportunity for the Nikkei 225By Danish Lim Zhi Lin, Investment Analyst Current Performance of SGX Nikkei 225 As of 22 July, the SGX Nikkei 225 September contract has slipped below the 40,000 level, hovering around 39,710 at around 11:04 SGT. Much of the decline can be attributed to a stock rotation out of Tech and into cyclicals and small caps across the globe. Semiconductors & Semiconductor Equipment Makers, in particular, saw a rout after an explosive first half. Nevertheless, we believe the direction forward appears to be aligning with our previous forecast of upcoming BOJ rate hikes and Fed rate cuts to translate into an eventual easing of yen depreciation pressure- supporting equity outperformance. We maintain our price target range of 42,00 – 43,300, with a midpoint target at around 42,650. Latest Developments The tech rotation was kick started by US CPI data which came in lower than expected, as well as unemployment figures which were higher than expected. The readings essentially cemented a September rate cut, with Fed fund futures pricing in a 91.7% probability for a September cut. US Treasury yields tumbled, resulting in a weaker Dollar that helped ease Yen depreciation pressure. Hawkish BOJ Meanwhile, in Japan, calls for another rate hike increased after National Core CPI data for June came in higher than expected. There was also a suspected intervention by the BOJ following the release of the softer than expected US CPI figures. On 11 July, the USDJPY currency pair plunged from 161.69 to as low as 157.44 in a little over half an hour, gaining more than 2% against the Dollar and prompting speculation that the BOJ had intervened in the market. Regarding the suspected intervention, Chief currency official Masato Kanda said that he’s “not in a position” to comment on whether Japan had intervened and that “our practice is basically not to say whether we have intervened or not”. Kanda also mentioned that “many see moves as one-sided, not matching fundamentals”, and that the BOJ doesn’t “see forex moves as stable”. Crucially he also spoke about the adverse impact of the weak yen on people’s livelihoods- as higher imported inflation resulted in a higher cost of living. We interpret his comments as hawkish tilt for the BOJ. With the path of least resistance pointing to a rate hike in the coming months. Kanda mentioned that the BOJ will disclose at month-end if intervention was conducted. Path Ahead Going forward, we maintain our call for upcoming Fed cuts and BOJ rate hikes to eventually normalize Yen depreciation pressure. Dollar strength will ease while Yen will see a boost from rate hikes, easing Yen weakness and boosting domestic spending that should translate into improved performance for domestic-demand stocks. We believe this could offset waning momentum in Tech and serve as the next growth catalyst for Japanese equities. We keep an eye out for real wages to turn positive, which could occur in the coming months once annual wage hikes are more fully reflected in the data. Should costs ease and wages continue to grow, we expect to domestic demand recovery to be the next key growth catalyst for Japanese equities. We maintain our price target range of 42,000 – 43,300, with a midpoint target at around 42,650. Nikkei 225 Outlook & Trading Opportunity: In our opinion, we expect BOJ rate hikes and delayed FOMC rate cuts to eventually translate into an eventual easing of yen depreciation pressure. This will support a Yen rebound to more comfortable levels- easing imported inflation and supporting consumer spending. We expect this to enable Japanese equities to sustainably outperform in 2H 2024. Corporate governance reforms should provide support for Japanese equities over the medium to long term. We see any near-term weakness or pullback as an entry opportunity. Expressing Our View: We maintain our trade setup below to express our view: Long SGX Nikkei 225 Index Futures The daily chart shows the contract having slipped below the key 40,000 level and hovering near the 0.236% Fibonacci extension level around 39,225. With a Trend-based Fibonacci Extension drawn from the October 2023 low, we set our target range between the 0.50% extension level around 42,000, and the 0.618% extension level around 43,300. Stop loss is set below the key support level at 36,650. This setup delivers a reward: risk ratio of 2.37x. • Entry Level: 38,430 (previous entry level) • Target Level: 42,650 • Stop Loss Level: 36,650 • Profit at Target: 3620 x ¥500= ¥2,110,000 • Loss at Stop: 1780 x ¥500= ¥890,000 • Reward: Risk Ratio: 2.37x Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan. Learn more here . *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by MAS
SGX:NK1!Long
by phillip_nova
The Nikkei snaps a 6-day losing steakNikkei futures found some stability on Monday around the May high, before going on to snap a 6-day losing streak. The daily RSI (2) was oversold to further suggest mean reversion could be due. And with Wall Street showing signs of stability ahead of tech earnings, we suspect a bounce could be due. The 1-hour chart shows the 14-period RSI spent some time in oversold before a 2-bar bullish reversal triggered a rebound at a key support zone. Bulls could seek dips within Monday's range on the assumption of a break above 40,000, with a minimum upside target of 40,500 in mind. If sentiment improves from here, perhaps a move to 41k could be on the cards near the June VPOC and gap resistance.
OSE:NK2251!Long
by CityIndex
Long Nikkei 225 futures setup into US tech earnings Nikkei 225 futures bounced strongly from the 50-day moving average overnight, mirroring the reversal in US equities during the session. With horizontal support located nearby at 39455, it provides a decent long setup, allowing for a stop to be placed below for protection targeting a push back towards the record highs struck earlier this month. While it would have been nice to have seen the overnight candle print as a bullish engulfing, there is still time during Tuesday’s day session to generate a bullish signal. Adding to the case to consider longs, the downtrend in RSI has been broken, signaling a possible easing in bearish price momentum. MACD is yet to confirm to the signal, underlying the need for focus on position sizing and capital protection. Earlier in July, the price did a lot of work either side of 41000, making that a potential initial trade target. Beyond, 41600 and the record high of 42500 will be in focus. Should the trade work in your favour, consider using a trailing stop or raising your stop to entry level to provide a free hit on upside. As for obvious risks to consider, intervention from the BOJ to strengthen the Japanese yen would have negative implications for exporter earnings, creating downside risks for the Nikkei. However, with key inflation and GDP data arriving later in the week, such a move appears unlikely in the near-term. Tech earnings from Alphabet and Tesla after market close on Wall Street on Tuesday will also be important, likely flowing through to the performance of Japanese equities. DS
SGX:NK1!Long
by FOREXcom
Analytical Perspective on Correlation between Nikkei225 & GBPBy Eric Lee , Sales Director of Phillip Nova Substantial Upward Trends in GBP/JPY and Nikkei 225 from 2020 to 2024 Over the past 4 years, from 2020 to 2024, both the GBP/JPY exchange rate and the Nikkei 225 index have shown substantial upward trends. The chart below indicates a close correlation between these two financial indicators, particularly from late 2022 to mid2024. The GBP/JPY (in blue) and the Nikkei 225 (in red) have both risen significantly over the observed period, with the Nikkei 225 reaching a recent peak around 40,500 and the GBP/JPY exchange rate climbing to approximately 203.886 Strong Correlation Between GBP/JPY and Nikkei 225 Movements There are notable periods where the movements of the GBP/JPY and the Nikkei 225 are closely aligned, suggesting a strong correlation between the two. This is particularly evident from late 2022 onwards, where both indices exhibit synchronized peaks and troughs. The Nikkei 225 has experienced periods of high volatility, with sharp rises and falls, particularly in 2023. According to Nikkei Asia, one significant factor contributing to the rise in Japanese stocks is the influx of foreign investment, notably $51 billion led by the U.K. This influx has boosted the Nikkei 225, highlighting the importance of foreign capital in driving market performance asia.nikkei.com Impact of GBP/JPY Exchange Rate on Japanese Equity Investments A strong GBP/JPY rate can indicate increased purchasing power for British investors, enabling them to invest more heavily in Japanese equities. The recent surge in the Nikkei 225 aligns with the period of increased foreign investment, as highlighted by the $51 billion influx led by U.K. investors. Currency strength often reflects broader economic sentiment. A rising GBP/JPY rate can signal confidence in the U.K. economy, encouraging investment in higher-yielding assets like Japanese stocks. Conversely, a weaker JPY can make Japanese exports more competitive, boosting corporate profits and positively impacting the Nikkei 225. Fluctuations in the GBP/JPY rate can influence global risk appetite. A stronger GBP against the JPY might indicate a shift towards riskier assets, including equities in robust markets like Japan UK Consumer Confidence and Its Correlation to GBP and Nikkei 225 According to data from GfK, the Consumer Confidence indicator in the UK rose to -14 in June 2024 from -17 in May, marking the third consecutive month of improvement and reaching its highest level since November 2021, surpassing forecasts of -16. That may explain the strength in GBP and its correlation to Nikkei225 as well. Global Financial Interconnectivity and Strategic Insights for Traders In conclusion, the global financial market is highly interconnected. The influx of foreign capital, particularly from U.K., has significantly boosted Japanese stocks, driving Nikkei225 to new heights. Thus, when trading a stock index such as Nikkei225, traders should consider the influence of currency movements and the dynamics the economic performance of related countries can have in providing valuable insights in their strategic decision making Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan. Learn more here . *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by the MAS
SGX:NK1!
by phillip_nova
Analytical Perspective on Correlation Between Nikkei225 & GBPBy Eric Lee , Sales Director of Phillip Nova Substantial Upward Trends in GBP/JPY and Nikkei 225 from 2020 to 2024 Over the past 4 years, from 2020 to 2024, both the GBP/JPY exchange rate and the Nikkei 225 index have shown substantial upward trends. The chart below indicates a close correlation between these two financial indicators, particularly from late 2022 to mid2024. The GBP/JPY (in blue) and the Nikkei 225 (in red) have both risen significantly over the observed period, with the Nikkei 225 reaching a recent peak around 40,500 and the GBP/JPY exchange rate climbing to approximately 203.886. Strong Correlation Between GBP/JPY and Nikkei 225 Movements There are notable periods where the movements of the GBP/JPY and the Nikkei 225 are closely aligned, suggesting a strong correlation between the two. This is particularly evident from late 2022 onwards, where both indices exhibit synchronized peaks and troughs. The Nikkei 225 has experienced periods of high volatility, with sharp rises and falls, particularly in 2023. According to Nikkei Asia, one significant factor contributing to the rise in Japanese stocks is the influx of foreign investment, notably $51 billion led by the U.K. This influx has boosted the Nikkei 225, highlighting the importance of foreign capital in driving market performance asia.nikkei.com Impact of GBP/JPY Exchange Rate on Japanese Equity Investments A strong GBP/JPY rate can indicate increased purchasing power for British investors, enabling them to invest more heavily in Japanese equities. The recent surge in the Nikkei 225 aligns with the period of increased foreign investment, as highlighted by the $51 billion influx led by U.K. investors. Currency strength often reflects broader economic sentiment. A rising GBP/JPY rate can signal confidence in the U.K. economy, encouraging investment in higher-yielding assets like Japanese stocks. Conversely, a weaker JPY can make Japanese exports more competitive, boosting corporate profits and positively impacting the Nikkei 225. Fluctuations in the GBP/JPY rate can influence global risk appetite. A stronger GBP against the JPY might indicate a shift towards riskier assets, including equities in robust markets like Japan. UK Consumer Confidence and Its Correlation to GBP and Nikkei 225 According to data from GfK, the Consumer Confidence indicator in the UK rose to -14 in June 2024 from -17 in May, marking the third consecutive month of improvement and reaching its highest level since November 2021, surpassing forecasts of -16. That may explain the strength in GBP and its correlation to Nikkei225 as well. Global Financial Interconnectivity and Strategic Insights for Traders In conclusion, the global financial market is highly interconnected. The influx of foreign capital, particularly from U.K., has significantly boosted Japanese stocks, driving Nikkei225 to new heights. Thus, when trading a stock index such as Nikkei225, traders should consider the influence of currency movements and the dynamics the economic performance of related countries can have in providing valuable insights in their strategic decision making Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan. Learn more here . *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by the MAS
SGX:NK1!
by phillip_nova
FAVORITE TRADE: NIKKEI225 & is this the beginning of the end?$NKD1 Key Points from the News: Japan's Industrial Production: Japan's industrial production jumped by 3.6% in May. This is a significant positive indicator for the Japanese economy, suggesting robust manufacturing and industrial activity. Nikkei 225 Index: The Nikkei 225 Index closed 2.35% lower. This decline in the index could be influenced by various factors including market sentiment, global economic conditions, and recent economic data. Japanese stocks have been volatile amid a surge in the Yen and speculation about possible intervention by the Japanese government or central bank. Yen Movements: The Yen has been choppy on intervention jitters, indicating that traders are nervous about potential government intervention to control the currency's strength. Yen's movements are affecting Asian shares, with a focus on weekly gains.
CME:NKD1!Long
by moneymagnateash
Nikkei 225 Breaches 41,000- Where Next?By Danish Lim Zhi Lin, Investment Analyst Current Performance of SGX Nikkei 225: As of 9 July, the SGX Nikkei 225 September contract briefly topped the 41,000 level, gaining 1.32% as of 11:01 SGT. The movements tracked overnight gains in US semiconductor shares, as investors remain optimistic ahead of Powell's semi-annual testimony to congress and inflation readings later this week. As of 10:35 SGT, gains were led by Fujikura Ltd (+11.66%), Tokyo Electron (+3.88%), Advantest (3.17%). This comes ahead of TSMC's earnings results next week, where it is widely expected to post an earnings beat and raise guidance. We maintain our previous thesis of BOJ rate hikes and delayed FOMC rate cuts to translate into an eventual easing of yen depreciation pressure- supporting equity outperformance. We update our price target to a range of 42,00 – 43,300, reflecting updated information. This puts our target price at the midpoint of the range at around 42,650. BOJ Hike in the Cards: Government data released Monday showed that Japanese workers saw their average base pay climb 2.5% YoY in in May, the fastest pace in 31 years; and higher than the headline figure which grew 1.9%. Overtime wages, a leading indicator of labour demand, grew by 2.3% YoY. This comes as this year’s “shunto” wage negotiation was able to secure an average wage increase of 5.1%, the largest since 1991. However, on an inflation-adjusted basis, real wages continue to lag behind inflation, as real cash earnings fell by -1.4%, in negative territory for the 26th straight month. We believe falling real wages further highlights the need for the BOJ to tighten monetary policy. At the same time, the BOJ’s June Tankan Survey indicated that corporate sentiment improved, with all-firms current sentiment index unchanged at 12, while the forecast index ticked up to 10 from 9 in March. Sentiment among both manufacturers and non-manufacturers also improved. Thus, we believe the improvement in wages will give the BOJ confidence that the wage-price cycle they seek could be emerging, giving room for the BOJ to normalize policy. This could help ease yen depreciation pressure- which has weighed on consumer sentiment and spending due to higher imported inflation. We keep an eye out for real wages to turn positive, which could occur in the coming months once annual wage hikes are more fully reflected in the data. The BOJ said it forecasts private consumption to recover in the coming months after 4 quarters of decline, underpinning an economic recovery. Should costs ease and wages continue to grow, we expect to domestic demand recovery to be the next key growth catalyst for Japanese equities. Nikkei 225 Outlook & Trading Opportunity: In our opinion, we expect BOJ rate hikes and delayed FOMC rate cuts to eventually translate into an eventual easing of yen depreciation pressure. This will support a Yen rebound to more comfortable levels- easing imported inflation and supporting consumer spending. We expect this to enable Japanese equities to sustainably outperform in 2H 2024. Corporate governance reforms should provide support for Japanese equities over the medium to long term. We see any near-term weakness or pullback as an entry opportunity. Expressing Our View: We maintain our trade setup below to express our view: Long SGX Nikkei 225 Index Futures: The daily chart shows the contract having broken above the 0.382% Fibonacci extension level and has been hovering around psychological resistance at 41,000. With a Trend-based Fibonacci Extension drawn from the October 2023 low, we set our target range between the 0.50% extension level around 42,000, and the 0.618% extension level around 43,300. Stop loss is set below the key support level at 36,650. This setup delivers a reward: risk ratio of 2.37x. •Entry Level: 38,430 (previous entry level) • Target Level: 42,650 • Stop Loss Level: 36,650 • Profit at Target: 3620 x ¥500= ¥2,110,000 • Loss at Stop: 1780 x ¥500= ¥890,000 • Reward: Risk Ratio: 2.37x Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements—trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan. Learn more here . *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by MAS
SGX:NK1!Long
by phillip_nova
3
Impact of Japan’s Largest Pay Raise on Nikkei 225Impact of Japan’s Largest Pay Raise on Nikkei 225: Market Insights & Trading Ideas Historic Pay Raise Boosts Japanese Economy By Eric Lee , Sales Director from Phillip Nova On March 22nd, Japan’s largest union group, Rengo, announced that Japanese firms have agreed to raise salary by 5.25% this year. This is the biggest raise the country had seen since 2013 . Given that Personal Consumption constituted 55% of Japan’s GDP, the pay raise is deemed to be positive for the economy and stock market as well. Source Correlation Between Disposable Income and Nikkei 225 Attached is the monthly chart comparing the performance of Nikkei 225 (in blue) with the 12-Months Average of Japan’s Disposable Personal Income since 1996. Their correlation explained the impact having higher disposable income had on the stock prices. Since its bottom in December 2023, the 12-Month Average Disposable Personal Income had been rising. Market should expect this to rise further with the announcement of higher salary by the union group Nikkei 225 Breaks Above Symmetrical Triangle Formation On a short-term basis, Nikkei 225 had broken above the Symmetrical Triangle formation it’s been in since April. Based on Classical Technical Analysis technique, we can set the target level for such formation at 42,700 and the cut-loss level at below the triangle formation which is at 37,900 at the moment. Trade Nikkei 225 at only 50 cents* now Capitalise on the Nikkei 225’s movements— trade SGX Nikkei 225 Index Futures at only 50 cents* now and stand to win a pair of air tickets to Japan . Learn more here
SGX:NK1!Long
by phillip_nova
Bullish SGX Nikkei 225 Futures on delayed BOJ hike and Fed cutBy Danish Lim Zhi Lin, Investment Analyst Current Performance of SGX Nikkei 225: As of 26 June, at 10:40 SGT, the SGX Nikkei 225 Index Futures contract was up by 1.52%, led by semiconductor-related stocks Tokyo Electron and Advantest. Sumitomo Pharma surged following reports it is considering layoffs and a new plant. This would mark the 3rd consecutively daily gain, underpinned by dip-buying activity following a weak April (-5.03%) and May (-0.05%). Based on our technical target levels, the contract looks to have breached immediate resistance at around 39,225. We believe this puts it on track to hit our target level at around 42,050 by end-2024. Continued Yen Depreciation: As of 27 June, the Yen has continued to depreciate, weakening to almost 160.9 per Dollar, the lowest level since 1986, ramping up intervention risks by the BOJ. Top currency official Masato Kanda reiterated that the government will take appropriate measures if there are excessive currency moves. This comes as last week’s CPI ex fresh food reading rose by 2.5% YoY in May, up from 2.2% in April. We believe the reading gives room for the BOJ to consider hiking rates in the coming months. However, the Yen continues to depreciate due to its interest rate gulf with the US, further exacerbated by the timing of Fed rate cuts being pushed back later into the year. Although a weaker yen has traditionally benefitted exporters, we believe yen weakness has gone too far and has resulted in higher imported inflation, eroding consumers’ purchasing power. Our research shows the correlation between the Nikkei 225 and USDJPY started turning flat once USDJPY went past 155. Corporates have cited levels around 120-130 against the USD to be “preferable”. As such, we believe a sustainable equity rebound would require further easing of yen weakness. Nikkei 225 Outlook & Trading Opportunity: In our opinion, we expect delayed BOJ rate hikes and delayed FOMC rate cuts to eventually translate into an eventual easing of yen depreciation pressure. This will support a Yen rebound to more comfortable levels- enabling Japanese equities to sustainably outperform in 2H 2024. Corporate governance reforms should provide support for Japanese equities over the medium to long term. We see any near-term weakness or pullback as an entry opportunity. Expressing Our View: We maintain our trade setup below to express our view: Long SGX Nikkei 225 Index Futures The daily chart shows the contract having broken above the 0.236% Fibonacci extension level and is headed towards the 0.382% extension level at around 40,780. With a Trend-based Fibonacci Extension drawn from the October 2023 low, we set our target level at the 0.50% extension level around 42,050. Stop loss is set below the key support level at 36,650. This setup delivers a reward: risk ratio of 2.03x. • Entry Level: 38,430 (previous entry level) • Target Level: 42,050 • Stop Loss Level: 36,650 • Profit at Target: 3620 x ¥500= ¥1,810,000 • Loss at Stop: 1780 x ¥500= ¥890,000 • Reward: Risk Ratio: 2.03x Trade Nikkei 225 at only 50 cents* now Ride the waves of the Nikkei 225—trade SGX Nikkei 225 Index Futures for as low as 50 cents* and you could win a pair of air tickets to Japan. Discover more here. *For applicable terms and conditions and a full risk disclaimer, please refer to www.phillipnova.com.sg. This ad has not been reviewed by MA
SGX:NK1!Long
by phillip_nova
Nikkei reversal risk with futures extremely overboughtNikkei futures are extremely overbought on a 4h timeframe having surged to more than two-month highs earlier Wednesday. On each of the past five occasions RSI has exceeded 77, as it has today, it has coincided with a near-term market top. By coincidence, today’s rally stalled at 39775, a level that acted as both supply and demand on multiple occasions earlier this year, including when last tested in April. While it goes completely momentum and comes just a few days before quarter-end, a short setup has presented itself. Having missed an earlier entry opportunity when futures failed above 39775, I’m prepared to wait to see whether we get another test during the European or North American session. If we were to fail again at 39775, you could initiate shorts with a stop above 39800 for protection. 39500 would be the initial target, a minor level that acted as resistance and support in April. Below, 39345, 39200 and 39025 are other downside levels to consider. DS
SGX:NK1!Short
by FOREXcom