The Nikkei 225 broke below its support line, and a downside break is now in focus, with the 29 July closing price of ¥61,434.19 viewed as a potential low. Signs of a rebound and momentum trends will be the focus going forward.
The previous column identified whether the Nikkei 225 could continue to hold above its support line after the SQ as a key point of focus. After reaching an SQ value of ¥63,039.49 on 11 September, the closing price was above the SQ value but fell below the support line connecting the 31 March and 29 July closing prices. As a result, the market has moved below the support line, intensifying the search for a potential low.
The lowest level that can currently be viewed as a potential low is the 29 July closing price of ¥61,434.19. Analysts say that if the decline stops without falling below this level, a temporary bottom may be expected.
To confirm a rebound, it will be important to see whether the Nikkei 225 can recover above and hold above its 5-day moving average. If it holds above the 5-day line, the line may turn upward and become more likely to function as support.
Momentum trends will also provide a basis for judging whether the decline has stopped. If momentum and its signal continue to fall below the zero line, the downward pressure is viewed as likely to intensify. Conversely, if the two lines turn higher, break above the zero line and hold there, a phase of strengthening upward momentum may be expected.