The Nikkei Stock Average rose to ¥69,608 on 14 August before plunging on 18 and 19 August, recording a ¥3,893 decline. ¥65,000 has again emerged as a key level, and the market will need to follow the prevailing trend going forward.
The Nikkei Stock Average rose to ¥69,608 on 14 August, but failed to reach the SQ value and was described as a phantom SQ. It then recorded 5 consecutive sessions of gains, heightening short-term concerns that it had entered an overbought range. The daily RCI also reached overbought territory.
The index fell ¥1,759 on 18 August and ¥2,134 on 19 August, a decline of ¥3,893 (5.6%) in just 2 days. Rising crude oil prices, higher long-term interest rates and the re-emergence of geopolitical risks following the expiration of the negotiation deadline between the United States and Iran intensified the risk-off mood.
After surging for half a month from its 29 July low, selling by investors waiting for a rebound became concentrated, sending the daily chart sharply lower to the levels of the 75-day and 25-day moving averages. The view was expressed that the uptrend could continue if ¥65,000 is maintained on a closing basis, while a break below that level would warrant considering the start of a correction.
In any event, following the market trend is considered essential, and attention will focus going forward on market movements around ¥65,000 as a key level.