The JP 225 stock index has experienced a significant drop to a 10-month low of 30,361, marking a 21% decline at the start of the month. This plunge has been attributed to recession fears in the US and a bullish cycle of the yen, creating a pessimistic outlook for investors. The index has seen its sharpest correction below the 200-day simple moving average since the pandemic, reminiscent of the lows from October 2023.
In order for the JP 225 index to recover and potentially reach the 35,470 barrier, it will need to overcome the resistance line at 33,585. Additionally, facing obstacles at April’s low of 36,692 and the 200-day simple moving average may hinder the index’s progress towards the 38,000 psychological mark. Despite the oversold signals detected by the RSI and the stochastic oscillator, there is a possibility that bears could become exhausted soon.
If the index fails to maintain its current momentum and drops below the 33,130 region, any hopes of recovery could be delayed. This would shift the focus towards the ascending trendline connecting the 2020 and 2023 lows at 31,400. However, even this trendline was ineffective in halting the recent freefall experienced by the market. If selling pressure persists, the index could revisit the October double bottom area of 30,300, with the 29,300 region becoming a critical pivot point for future price movements.
Investors are advised to closely monitor the developments in the JP 225 index, particularly in relation to key resistance levels and potential recovery zones. While there is a possibility of bullish momentum resuming above 33,585, the current market conditions indicate a high level of uncertainty and volatility. It is essential for investors to assess their risk tolerance and adopt a cautious approach in light of the ongoing turbulence in global stock markets.
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