Over the past two weeks, Japan’s leading stock index surged 2,000 points, reflecting strong bullish momentum. However, this week saw a sharp sell-off, erasing nearly all gains since mid-January. Despite this drop, the decline stalled at the 61.8% Fibonacci retracement, a key technical level that historically acts as the final support before a correction turns into a full trend reversal.
Since yesterday, we’ve observed early signs of recovery, with the index bouncing 500 points from this crucial Fibonacci support. This price action suggests renewed buying interest, reinforcing our view that the market is poised for another upward move. Given this setup, we prefer to enter a buy trade, targeting a return to the recent highs above 40,500.
Furthermore, rising stock indices in the UK, EU, and USA support the broader hypothesis that global equities are rebounding, strengthening our bullish outlook on Japanese stocks.
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