EQUITYOPPORTUNITY

Thursday, January 16, 2020

The Nikkei Index has a fair shot at 27,000-28,000 within a year


A long downtrend line since the bursting & unraveling of the infamous  bubble economy, accentuated by the double H & S top in 1987-1991 was finally broken on the upside in 2014 and was tested in 2016 at the height of the Brexit uncertainty.

The current uptrend line(in green)was tested in Dec '18 & retested in Aug '19 and, although there is  no guarantee of a triple top to be completed in '20, the probability is low because of the greater likelihood of an enormous reverse H & S that ground out hundreds of thousands of companies & millions of Japanese economic participants from 1992 to 2012.

I believe the dollar/yen exchange rate as shown in the chart below will resolve itself to the upside(green arrow), giving impetus to the recovery that can potentially sustain the Nikkei's rise.

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