Japan 225: Closes Up 57% for the Year, Higher-High May Follow, QQE fueling Price Action
The long term weekly candle chart below shows the price history of the Japan 225 contract for difference (CFD) trading near a fresh six-year high today as the close of the year approaches. This CFD aims to represent a leading Japan stock index and is currently trading near 16,263, and just off 16303 in today's session.
The high for the Japan 225 CFD comes on the heels of multi-year high's made yesterday in the USD/JPY pair when it reached over 105.00 for the first time in five years, as 2013 comes to a close.
Just as the WallStreet CFD may be heading to 17,000 so may the Japan 225 CFD, while the latter is still well off its all time high under 40,000 reached in 1989, despite being up from 10,000 at the start of January 2013 (the Nikkei closed up 57% for the year in Japan's trading session earlier today -its largest annual gain in four decades).
As the QQE program reffered by Westerners as Abenomics has been underway since April, prospects of an exit from deflation may be helping to fuel markets as GDP also gets a boost in Japan according to the latest data from the Minstry of Finance (MoF).
Accordingly, while a pullback could be healthly for both the Indexes and the nations currency in Japan, higher-high's may follow current levels.
Taking a medium-to-long term view of the Japan 225 CFD, using the weekly chart below, a resistance line Equidistant an of equal slope to a medium term trend line underpinning recent support - can deduce potential resistance new current highs, and reflects a bullish resistance line (slopped slightly upwards).
While this is the first time that the Japan 225 CFD has been covered in the Ideas You Can Trade series, it has been of interest and under our radar for some time following a recent zig-zag pattern but the break above to higher levels and subsequent steep bullish curvature of the trend indicates that a wide-range of prices could follow (between 14,000-18,000) over the medium term.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 16455 with a Limit to take profit @ 16843 and a stop-loss @ 16120 Risk/Reward Summary: Limit risk = +388 points profit / (-335) Stop-loss risk = Gain to Loss ratio = 1.15
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 15999 with a Limit to take profit @ 15610 and a stop-loss @ 16198 Risk/Reward Summary: Limit risk = +389 points profit / (-199) Stop-loss risk = Gain to Loss Ratio = 1.95
Weekly Candle chart:
A note on CFD’s: A Contract for Difference, or CFD,is a financial contract allowing traders to potentially profit whether markets move up or down and include risk of loss. CFDs are cash-settled based on the difference in the value of an underlying asset from the time a trade is opened to the time the position is closed. A list of available CFDs that can be traded with WorldWideMarkets.com (WWM) can be found on the WWM website.
The Ideas You Can Trade - Series will not published on December 31st 2013 and January 1st 2014, in observance of new years eve and new years day Holiday, and will resume on December 26, 2013. A full schedule of related trading hours for WWM can be found on http://www.worldwidemarkets.com/wwm/holidayhours.aspx
Wishing everyone a happy New Year 2014!