Nikkei 225: Break below support at 22580/40 turns the short-term risks lower – Credit Suisse

Nikkei 225 broke below 22580/40 to complete a near-term top, before reversing sharply higher as the day progressed. Analysts at Credit Suisse expect the Japanese index to remain capped below 22835/855 to maintain the top.

Key quotes

“The Nikkei gapped sharply below support at 22580/540 as the market returned from its holiday break, which completed a near-term and minor ‘double top’. The market subsequently reversed aggressively back higher as the session progressed, however whilst below resistance at 22835/855, the top will remain in place for a fall back to 22285, before the 200-day average and late June low at 21970/940, which should be a tough barrier.”

“Below 21970/940 would rekindle thoughts of a much deeper setback, with more important support then seen at the June low and price gap at 21580/530.” 

“Above 22835/855 would negate the top, with next resistance then seen at 22925/965. Thereafter, only a move above 23185 would instead suggest the range has been resolved higher, with the next level seen at the top.”