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Nick Goold

Technical analysis

The Nikkei finally broke above 28400 resistance last Friday and then on the same day easily broke above resistance at the March high of this year. Last week we indicated the Nikkei was positive and best to look for buying opportunities so we were expecting this move higher. The main news last week was the lower-than-expected US inflation figures which was a relief for equity markets resulting in strong buying. For swing traders, there was a very high risk-reward buying opportunity on Wed Aug 10 when the market returned to support at the 10-day moving average.

Using a simple moving average is a good way to find profitable trading opportunities. The moving average is the world`s most popular indicator and has both trend and range trading signals. A 10-day moving average is ideal for trading as it presents many trading opportunities with high-risk rewards. Last week the market went slightly below the moving average which was a false sell signal, on Wednesday once the market rose above the moving average the uptrend was confirmed where buyers aggressively entered the market.

After Friday`s large rise there is a large gap from the moving average so it is dangerous to buy at these levels. Short-term traders might look to take profits if the market should drop on Monday. Higher levels continue to look likely so should the market return to previous resistance around 28400 this could present a good buying opportunity this week.

Volatility remains high so there are many short-term trading opportunities in the Nikkei 225 during the day. When short-term trading a 5-minute chart with a 10-day moving average is a good way to find regular trading opportunities.

Resistance:29000, 30000

Support:28400, 28000, 27500, 27000, 26000, 25500, 25000

Daily Nikkei 225 with 10 day moving average indicator

How the Nikkei moves during the day

You can trade Nikkei CFDs with Titan FX all day, but it is better to concentrate on when there are the best trading opportunities. Below is a chart that analyses the average 30-minute range of the Nikkei during the day for the past month. The first column is the first 30 minutes of the hour and the second column is the second 30 minutes of the hour.

The highest volatility is 25 pips (1 pip = 5 yen) or 135 yen from 9:00 to 9:30 Tokyo time. From 9:30 to 10:00 the volatility is 17 pips or 85 yen. Tokyo open is when the market is most active and has many swing and day trading opportunities. The market can move quickly, so be well prepared to take advantage of the market volatility.

Another great time to trade the Nikkei is during the Tokyo night when the US equity markets are active. US equity markets open from 22:30 in summer and 23:30 in winter. Different times of day require different trading strategies making it beneficial to specialize in the Tokyo or US market.

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