After the weekend's major SQ, the focus for Japanese stocks has shifted to whether the Nikkei 225 can hold its support line, with attention on the movement of the 25-day moving average, the shape of the triangle consolidation and the trend in momentum.
The Nikkei 225 rose sharply above its 25-day moving average on 7 September, but plunged on 8 September, falling below the moving average and approaching the lower boundary of the triangle consolidation. The SQ is scheduled for 11 September, and position-adjustment trading ahead of it may be causing sharp swings in share prices. The focus going forward will be on whether the market can remain above the support line after the SQ. If support holds, an upside breakout may be possible, while a rising risk of a breakdown could strengthen downward pressure.
The triangle consolidation is formed by a support line connecting the closing prices at the end of March and the end of July, and a resistance line connecting the closing prices on 31 October 2025 and 27 February 2026. The sharp decline on 8 September brought the market back toward the support line. Momentum rose above the zero line on 7 September but fell below it again on 8 September, indicating that downward momentum is strengthening.