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Nikkei Initiates Bullish Sequence Following Failed Run at 200-Day SMA



The Nikkei pares the sharp decline from the previous week and initiates a bullish sequence as easing tensions between the United States and North Korea bolsters market sentiment.


The JPN225 may stage a larger recovery as it appears to be responding to the upward trend carried over from June-2016, and the broader outlook remains constructive as the Bank of Japan (BoJ) sticks to its Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control. In turn, the benchmark equity index may exhibit a similar behavior as in April amid the failed attempt to break below the 200-Day SMA (19,314).


However, the recent pickup in risk appetite may largely unravel especially as the Federal Reserve looks to further normalize monetary policy in 2017, and the ‘Great Rotation’ may ultimately trigger a material shift in market behavior as ‘the Committee expects to begin implementing its balance sheet normalization program relatively soon.’

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