Can Nikkei be at the start of a new bull?

S&P Bull market or bull trap?
April 19, 2016
Τα νέα υψηλά δεν είναι απαραιτήτως καλά νέα….
April 25, 2016

Has NIKKEI ended a 3 wave decline? Highly likely…if this is the case, then prices should start moving higher in an impulsive pattern. and target 19500 to end wave 3 that has just started. Let us start with the longer-term chart where I count the entire decline of late 2015 and early 2016 as wave 4. Structure suggests that this is a possible scenario as the decline is in 3 waves. For this scenario to have increased chances of success we would also like to eliminate all chances that the bounce we are currently in is not another 2nd wave of lesser degree or a wave B. Unfortunately this can be confirmed only if we break above 20k. However If price continues to rise in an impulsive pattern, chances are that we are in a final 5th wave.

nikkei2

Below we take a closer look at the possible impulsive structure the upside move can take. The 161.8% extension of wave 1 brings wave 3 to 19500. Currently we only see  3 waves up and but this can unfold into something bigger to the upside as price is making higher highs and higher lows.

nikkei3

Nikkei has broken the 1st downward sloping red trend line resistance and I believe bulls have a lot of chances of success to reach the Kumo  near 18300. But beware as the chart below shows, this could very well be wave B up before a new sharp decline for wave C.

nikkeibear

The structure of the rise will clear things up regarding which scenario is most probable. For the time being bulls are in control and I expect more upside to follow.

Thank you for taking the time to read my thoughts.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.