NIKK Tokyo Nikkei Daily Chart Inverted H&S Patterns Overbot Negative Divergence

The Nikkei shows the same inverted H&S pattern as the dollar/yen chart (blue bars). The head is 8200, neck line at 10850, which is a difference of 2650 so an upside future target is 13500. However, look at the rocket launch from mid-November, these types of moves need to rest and pull back.  There is also an inverted H&S shown with the maroon bars, head at 8200, neck line at 10200, difference of 2000, thus, a target of 12200. The green lines in 2011 show the positive divergence and falling wedge that created the Nikkei bottom. Price is now at the early 2011 highs but negative divergence (red lines) want to see a pull back. The RSI, MACD line and ROC, in the last year time frame, want to see a higher high in price after a pull back occurs. Price is very responsive to S/R from late 2010 early 2011.

The 10200 is an important support/resistance level so a back test would be in order. Projection would be a move thru the sideways channel 10200-10800 for the forseeable future. Many traders have bet the farm on the Nikkei catapulting higher all year long but the chart says much of that move has occurred. Price likely needs to consolidate sideways for a while. Keystone's 80/20 rule says 8's lead to 2's and price has already hit 10940, so a price move to tag 11200 is not unreasonable, however, as the overbot conditions and negative divergence remain, the move thru the sideways channel should continue, perhaps increasing the width to 10200-11200. A move back down to 10200 is very much in play moving forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.