Nikkei 225 Futures Spring into Action on BoJ’s Ultra-Loose Stance 

Nikkei 225 Futures Spring into Action on BoJ’s Ultra-Loose Stance 

The Nikkei 225 Futures (CME: NIY) have arrived with a spring in their step from the close of trade on Friday. The Futures flattened ahead of the release of jobs data but are now rallying due to hopes that the United States is nearing the end of its monetary policy tightening, thereby bolstering the equity market as a result.  

Furthermore, the BoJ’s summary of opinions revealed that seven out of the nine members favoured the retention of the ultra-loose monetary policy, which bolstered the Nikkei 225. However, gains could be capped as traders keep a close watch on China’s upcoming Balance of Trade data on Tuesday and inflation data on Wednesday. The expected decrease in China’s Balance of Trade from $70.62 billion to $70.6 billion adds an element of uncertainty to the Nikkei’s outlook. 

Technical 

A downward trend threatened the Nikkei 225 Futures on the 4H Chart and established major support at 31,745. However, a surge in the index level encouraged the formation of an ascending channel pattern which established resistance at 33,460 before tumbling once again towards the 31,745 major support.   

Since downside momentum failed to break down the 31,745 major support, a leg up sustained a breakout past the 23.60% Fibonacci level, paving the way towards the 32,500 resistance at the 38.20% Fibonacci level. If the index surpasses the 32,500 resistance, the 33,460 resistance may be a point of interest in reversing the downward trajectory towards the 33,710 major resistance, which could mark a pivot point for an upward trend.  

However, demand and supply are in equilibrium which could encourage a leg down towards the 31,745 major support. If a breakdown of this support occurs, the price action may succumb to lower levels of support, encouraging the continuation of a downward trend.  

Summary 

The Nikkei 225 futures ticked up following the BoJ’s summary of opinions today, which could encourage a leg up towards the 32,500 resistance. However, macroeconomic data releases from China could cap the price action’s gains, encouraging a possible pullback towards the 31,745 major support. 

Sources: TradingView, CNBC, Reuters