Nikkei May Hit 15,500 on Golden Cross: Technical Analysis

Japan’s Nikkei 225 Stock Average is is poised to rise to 15,500, a level unseen since January, as a technical pattern known as a golden cross signals upward momentum, according to Nomura Holdings Inc.

The Nikkei 225’s 25-day moving average rose above the 75-day moving average on June 12, forming the golden cross pattern for the first time since September. That adds to bullish signals for the gauge, which has rallied through a trend line connecting its Dec. 30 and April 3 highs, said Shoichiro Yamauchi, an equity-market strategist at Nomura. An advance to 15,500 would be a 2.7 percent gain from last week’s close.

“It’s risen clearly above the trend line and is gathering momentum,” Yamauchi said in a phone interview on June 13. “The correction that we’ve seen from January is over and the market is on course to climb higher.”

The Nikkei 225 rebounded 7.8 percent from its May 19 low through last week. It’s still the worst-performing developed-market benchmark measure this year, declining 7.3 percent through June 13.

Nomura’s Yamauchi sees a short-term correction for the Nikkei 225 because its recent rally has been too steep, he said. After that, the gauge will rise to 15,500, he said.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

Before it's here, it's on the Bloomberg Terminal.