After last week’s wild ride on the Nikkei 225, yesterday morning there was a fantastic opportunity to open a relatively low risk long position in this index. Using the MIDAS Method as the primary guide, two other technical analysis techniques combined to give a strong buying signal at about 13,700. These were the 30-minute RSI and 50-day moving average indicators.
Within 24 hours the Nikkei had jumped over 700 points.
|MIDAS Method Overview|
|Stock/Index/Currency/Commodity||Nikkei 225 (Japan)|
|Support Launch Month||APR2013|
|Level of Support||2nd|
|Price of Support||13,974|
But first to recap, below is Friday’s MIDAS chart;
The Launch Point for APR2013 support (light blue line in the diagram) was April 4th 2013. Although this Launch Point is above NOV2012 support (purple line in the diagram) on this date the nature of the Japanese equity market changed fundamentally as the Bank of Japan began its massive Quantitative Easing programme. If recent history in other countries is anything to go by, the outlook for Japanese stocks is extremely bullish while this QE programme lasts.