Butter, Meet Hot Knife
Coming into this week the Nikkei faced incredibly important and formidable resistance.
As a refresh that resistance included:
- A falling trend-line off the 1989 and 2007 highs – the most important tops in the index’s history
- 61.8% Fib retracement resistance, formed off the index’s 2007 highs and 2009 lows
We show both in the chart below.
Note, with the move to 14,600+, or +660 bps on the week, that the index just tore through both sets of resistance, like a hot knife through better (apologize for lack of a better analogy).
This break-out, so long as it holds, is likely a very big deal for the Nikkei going forward given the importance of the resistance that was at hand.
Our thoughts on the index’s next potential move can be found here and here are some of our original thoughts on the Nikkei, dating back to winter and last summer.