The Nikkei 225 fell sharply below its previous support line and dropped below ¥65,000, drawing attention to its future direction. Focus is also turning to levels that could indicate where the decline will bottom.
The Nikkei 225 broke below the support line identified in the previous column and fell on 15 October, with a 3,318-point trading range. As a result, it fell below both its 75-day and 25-day moving averages.
The Nikkei 225 fell below ¥65,000 and at one point also traded below ¥64,000 this week. The downside breakout may have contributed to the subsequent weakness in its rebound.
As a recent low, the index reached ¥62,726 on 14 September, while ¥63,492 on a closing-price basis has been cited as a level at which the decline may bottom. Whether it can hold ¥63,492 on a closing-price basis is seen as key to its future direction.
The momentum indicator has fallen sharply below the zero line. If the index breaks below its recent low, the decline could accelerate, while a reversal could lead to a rebound phase.