Introduction
Nikkei 225 E-mini Futures (NKD) have been trading within an ascending channel since September 2024. A breakout above 39,958, could pave the way for a test of the all-time high (ATH). Lets take a deeper look at the technicals.
Technical analysis overview
Channel Structure
- Price has been oscillating within an ascending channel, maintaining higher highs and higher lows.
- The upper boundary of the channel is acting as a resistance zone, while the lower boundary continues to provide support during pullbacks.
- A confirmed breakout above resistance could trigger accelerated buying pressure.
Support and Resistance Levels
Resistance Levels (Upside Targets)
- 39,958 – The most important resistance level. A breakout above this level could trigger momentum toward new highs.
- 40,500 (ATH zone) – The next major target if 39,958 is breached.
Support Levels
- 38,500 – Immediate support from recent swing lows, aligning with short-term trendline support.
- 37,800 – A stronger support level at the mid-range of the ascending channel.
- 36,500 – Lower boundary of the channel, aligning with long-term trendline support and a key inflection point.
Scenarios to Watch
Bullish Case (Breakout Above 39,958)
- A sustained breakout above 39,958 could attract buyers targeting the all-time high of 40,500.
- A confirmed move above this level with increasing volume would further validate the bullish scenario.
Bearish Case (Rejection at 39,958)
- A failure to break above resistance could lead to a pullback toward the 38,500 support level.
- A break below the channel’s lower boundary at 36,500 would signal a deeper correction and shift momentum bearish.
Trade Ideas
Bullish Setup
- Entry: Long positions on a confirmed breakout above 39,958, targeting 40,500 (ATH).
- Stop-Loss: Below 39,500 to limit downside risk.
Bearish Setup
- Entry: Short positions if price gets rejected at 39,958, targeting a retracement to 38,500.
- Stop-Loss: Above 40,000 to manage risk.
