Short Term Trading Member Forum

[techcharter]

NIKK Japanese Nikkei Market
The Nikkei is in the late stages of topping.

Weekly charts:
Stochastics have been in the overbought area for 7 months. Recently the stochastics issued a SELL signal.
In January '06 the price started pulling away from the upper bollinger bands. The price moved sideway and is resting on the middle of the bands. The upper band is capping over to limit upside potential. Be on guard for a price move off the middle to one of the bands.
MACD and histogram issued SELL signals.
RSI has been in the overbought area for 7 months. Recently the RSI issued a SELL signal.
The Elliott wave count is a double zigzag from the April '03 lows. The 2nd zigzag is parabolic. Once the market tops, the initial selloff should be quick. There could still be one more rally through March to a new 52 week high.
It's not surprising the indicators spent a long time in overbought areas as the Nikkei rallied 50% in a year!!! This is a blow-off spike.

Daily charts:
Stochastics gave a sell signal in early February '06; became oversold and gave a buy signal around Feb 20; and gave another sell signal without becoming overbought.
The bollinger bands are forming an arched top. The price has been trapped in the lower band the last 3 weeks.
The price has spent about half of the time trading below the 50 day average. The 50 day average is flattening; a bearish sign.
The MACD gave a SELL signal from overbought levels in January. There was a bearish divergence at the new 52 week high made in Feb '06. Now the MACD is negative; bearish sign. The MACD started to pull away from the signal again this week; expect continued selling.
The RSI gave a sell signal in mid Dec '05 and has drifted lower ever since. There was a bearish divergence at the new 52 week high made in Feb '06.
The rally out of the January '06 low was a motive elliott wave. The sell off in the first half of February looks more like a zigzag than a motive wave. Likewise, the rally out of the Feb '06 lows looks corrective.

Over the next week there should be continued selling. The rally out of the next low should challenge the 52 week highs in late March '06 or early April '06.