Since the beginning of the year, the Japanese main index lost 0.2% but last week rose more than 1.5% and remains in a bullish phase since mid-April.
Last week the Japanese index rose with a narrow range and closed near the high of the week, in addition, managed to close above the previous week high, which suggests a strong bullish momentum.
The stochastic is showing bearish momentum and crossed below the overbought zone.
The Japanese Index price action could not sustain above the 23.6 Fibonacci retracement at 22,795 and began a downward correction in late May. Found support near the 38.2 Fibonacci retracement at 21,925 and now is eyeballing the last swing high at 23,050.
Expecting a downward move to a 38.2 Fibonacci retracement at 21,925 on a bounce from the last swing high at 23,050 (scenario 1) however a bounce from the 38.2 Fibonacci retracement at 21,925 at 21,925 may bring the bulls into the market pushing the index up toward 23.6 Fibonacci retracement at 22,795 (scenario 2).