The Nikkei Average is entering a rebound phase from oversold levels. It closed at ¥57,434.77 on 6 November and could return to the ¥60,000 level at the start of the week, but downside concerns remain given the 200-day moving average and low RSI.
The Nikkei Average closed at ¥57,434.77 on 6 November. RSI, which indicates market overheating, had fallen to 25.9%, below the 30% level generally considered oversold. The closing price at the start of the following week, on the 9th, was ¥58,775.50, and RSI had recovered to 32.5%, but the index remained some distance below the 200-day moving average, which stood at ¥61,990.28 on the 9th.
On the daily Ichimoku chart, the index had broken below the cloud, with the conversion line below the base line and the lagging span below the daily price from 26 days earlier. This triggered the three-line bearish crossover known as a three-way reversal, a sell signal. Accordingly, the view has been expressed that downside concerns would remain even if the Nikkei Average returned to the ¥60,000 level on the 10th.
PER, calculated by dividing the share price by forecast EPS, has fallen rapidly and is considered to be at an undervalued level at present. Meanwhile, the Nikkei Average's weekly chart had formed an upward trend channel since April last year, but fell below its lower boundary last week.
As long as the medium- to long-term uptrend driven by structural changes at the macro and micro levels is maintained, the Nikkei Average's weekly chart is considered likely to return to the trend channel.