Courtesy of Chris Kimble.
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Could a price zone that started impacting the Nikkei 30-years ago still impact it again today? Well it looks like it is!
The Nikkei found the 21,000 level, line (1), to be support several times between 1987 and 1992. Once this support broke it then switched from a support to a resistance level.
As you can see several times from 1992 to 2000 the Nikkei ran into this resistance zone and failed to solidly break above it, leading to a top numerous times. The last time it hit this resistance zone was back in 2000. After failing to break above resistance then, it proceeded to fall 50% in value from 2000 to 2003.
The Nikkei rallied strongly from 2012 to this year, up over 100% during that time frame. This rally took the Nikkei back to resistance zone (1), where so far the rally stopped again.
After hitting this resistance zone what has taken place? Not only has it stopped pushing higher, its broken below support line (2), which is where the strong rally took place.
Bottom Line....The Nikkei is back at its “Topping Zone” and its breaking steep rising support at this time. This is NOT good price action for the Nikkei. When it topped in 2000 and 2007 and fell hard on these dates, the S&P 500 did too! This support break by the Nikkei could very much impact the S&P 500 again, be careful out there!
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