ZLBT Chats

Sunday, November 7, 2010

TECHNICAL ANALYSIS >>> The NIKKEI 225 Inverse Head and Shoulder

Although a little late to the party, the Nikkei 225 ($NIKK) is showing signs of life with an inverse head-and-shoulders pattern taking shape.

Note that the S&P 500 formed an inverse head-and-shoulders from mid May to mid September and broke resistance in the second half of September. The Nikkei continued to a new low in late August, but forged a higher low in early November to form the right shoulder.
The chart on the left shows the left shoulder forming in July and the head in late August. With the global rally in stocks, the Nikkei surged to neckline resistance with a strong move the last two days. This reversal pattern would be confirmed with a neckline break, but I am marking a resistance zone around 9750 based on the neckline and October high.

A break above the October high would complete the pattern. According to classic technical analysis, the distance from the neckline to the August low (head) is added to the breakout for a target. This targets a move to around 10650.
In all probality, Tokyo is gonna give give a strong performance on Monday.
Japanese investors are just waiting for any pullback to get a position.
No reason why other asian bourses should not play "follow-the-leader."
Honkies HSI is even more awesome with a 7.7% gain last week.
FKLI will take the cue before FBM KLCI open at 9.00am Monday.

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