The Japanese Nikkei 225 index is an interesting one to trade and several important conclusions can be drawn from traders taking a negative approach, a neutral approach and a positive approach. In the short-term, the consensus estimate is that the Nikkei 225 is bearish. In the medium-term, the index is neutral and in the long-term the bulls win out. Let’s look at the short-term with respect to the Nikkei 225 index. The trend is bearish and the declines will likely continue as expected given the negative interest-rate imposed by the Bank of Japan. There are various support points along the 16,000 level and the resistance points appear to be holding firm at 17,900. The relative strength index has diverged against the price which indicates the likelihood of an upwards movement. However it should be remembered that over the short-term, the consensus estimate for this index is negative.

If we move over into the medium-term range for the Nikkei 225, it looks likely that we will see slow rising rates take place initially. This will take the form of horizontal movement as the index breaks lower at the support points of 16,900. If there is a clear break, we will see further declines taking place in the index. However in terms of pure technical analysis, we are looking at neutrality over the medium-term. As we advance through to the long-term, the trends are clearly bullish. There is rising movement on the upside, slow at first after a sustained period of horizontal development. The support levels appear at 16,300, after which there will likely be more bullish action. Technically, the expectation for the long-term is positive. The short-term is defined as a period of 5 months on the chart with an investment perspective of 1 – 6 weeks. The medium-term is defined as a period of 18 months on the chart with an investment perspective of 1 – 6 months. The long-term is defined as a period of 6 years on the chart with an investment perspective of 1 – 6 quarters.