Golden Fib tested for the Nikkei 225!
The Nikkei broke down over the last couple weeks since I talked about it (double top play) on the “Trade Off” show, episode 7 on January 27th as expected, but is it time for a bounce?
My assumption is it is dangerous chasing the market down at these levels. There are a few things forking “against” shorts at these levels:
- The Nikkei 225 has reached the 161% golden Fibonacci extension level of the Aug 2021 lows to Sept 2021 highs. That level is at 24,488.
- The Nikkei is also testing the highs from Oct 2018 (previous highs once resistance now support)
- Daily RSI is reaching oversold.
The risk is a bounce near term, but looking to sell rallies back above the 26,000 level makes more sense to me. Ultimately, the double top and range extension takes us back to the 23,000 level.