I’ve noticed recently that the Japanese Nikkei 225 has been doing a lot of touch and gos. In fact for 20 years it has been doing touch and gos against a falling trend line resistance, as shown in the chart below. Since 1996, every time the Nikkei touched the falling line it fell back. Sometimes further than others, but each time -- in 2000, 2007 and 2013 -- it pulled back. That changed in 2014 when it broke through to the upside.
Since then it moved higher for several months but then started a pullback. Last month the Nikkei had another touch and go, hitting that same extended line, now acting as support and then rebounding back higher. In technical analysis we call this a retest. And when this happens and is confirmed, by a follow up the next period with a reversal back higher, it is a very bullish signal. Keep your eyes on the Nikkei the rest of the month. A close at the end of February over 17518.30, where it closed January, could mean big things for the Japanese market.
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