Continuation of the bull market in Tokyo, Nikkei, the highest since February 1990

Japanese on Thursday Nikkei index broke the barrier of 35000 points. and ended the day at its highest levels since February 1990. The situation on the chart suggests that this is not the end of the growth on the Tokyo stock exchange.

Nikkei highest in 34 years

After a 7-month break, the Japanese stock market is again breaking long-term records. First, on Wednesday, the Nikkei index increased by 2,01%, breaking above the zone of strong resistance created by the peaks of June, September, November and December 2023, and closing above 34 points for the first time in almost 34000 years. Today Nikkei grew by 1,77%. up to 35049,86 points., opening a wide bullish gap on the chart and ending at the highest level since February 1990.

This week, the Japanese Nikkei has already increased by a total of 5%, which gives hope that this will be the best trading week for the Tokyo Stock Exchange since March 2020. Since the beginning of 2024, this index has gained 4,7%.

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Wednesday's breaking of key resistances by Nikkei naturally fueled today's gains on the Tokyo stock exchange. Just like the upward closing of yesterday's session on Wall Street.

However, the increase on the Japanese stock market is mainly driven by the slightly postponed prospect of tightening monetary policy by the Bank of Japan, after the recent earthquake in Japan and a series of weaker macroeconomic data. This is compounded by an even weaker yen, which supports the growth of exporters' shares.

The situation on the JP225 daily chart confirms the significant change in the balance of forces made yesterday.

Daily chart of JP225 (CFD on the Nikkei 225 index). Source: Tickmill

Yesterday's break above the highs from the second half of 2023 finally confirmed that the upward turn from the 200-day average observed at the end of October and the simultaneous defense of the low from the first days of October have finally ended the downward correction lasting between June and October, and the JP225 returned to the long-term upward trend. And although in the short term, after the strong increases in recent days, the JP225 daily chart is already slightly overbought, hence some pullback is possible, but in the medium and long term there is only one direction: up. Only when JP225 dropped again below 34000 points. would change this favorable picture of the technical situation for stock exchanges.