In a recent turmoil Nikkei had created a 26 years low at 6994, the value last seen in Dec 1982. The "primary" bearish trend, started at 38957(Dec89), has seen 82% value erosion, so far. Since recent high of 18.3k(July07) we lost almost 62%, i.e. same magnitude of the fall seen across all "emerging markets" & not "Developed markets". However, in short to medium term, the Nikkei will recover, depicting the anticipated recovery in the global equity markets (see World index analysis).
See the inlaid weekly chart. The index has shown "Double bottom" formation on "close "charts. The earlier bottom was 7699 (April 03) & the recent one at 7649(Oct08) (tolerance level of less than 1%), with the implication of quick up move, which is what happened. Further,the down move from July 07 has formed "expanding" triangle with the possibility of "e' wave ending near the recent low.
Both the observations indicate a short to medium term uptrend, within the overall "primary" downtrend. As far as "reversing" the primary bearish trend, we need to observe how the things unfold in the next 2-3 quarters.
On the daily charts, the index has corrected 0.50% fib retracement (at 8266) of the recent rally from 6994. The cluster area of fib 0.618% and 0.50% retracement levels i.e. 7961-8266 will act as a strong support to the index in ensuing corrective rally. On the upside "close" above 9601 is important for a quick up move towards 10.7k -10.9k in the next few weeks.
