Since the beginning of the year, the Japanese main index lost more than 0.5% but last week rose above 3.5% and made a phase change, shifting from a distribution to a bullish phase.
Last week the Japanese index expanded to the upside with a wide 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 a strong bearish momentum however is still above the 50 midline.
The Japanese Index bounced from the 50-week moving average with relative strength and is now eyeballing again the 23.6 Fibonacci retracement at 22,795 which is a key inflection point.
Expecting a downward move to a 38.2 Fibonacci retracement at 21,925 on a bounce from the 23.6 Fibonacci retracement at 22,795 (scenario 1) however a break above the 23.6 Fibonacci retracement at 22,795 may bring the bulls into the market pushing the index up toward 2017 high at 23,440 (scenario 2).