The consumer price index (CPI) in Japan rose to 1.3% year-on-year in August, comparing to the 0.9% registered in July and exceeding analysts’ estimates of 1.1%. It was the highest rate since February, mainly driven by a boost in prices of food and an increasing rise in the cost of transport.
The Japanese main index began October on the right foot with a gain of over 1.0% and is in a well establish bullish phase since mid-September.
On yesterday session, the Nikkei 225 rallied with a wide range and closed near the high of the day, in addition, managed to close above Friday’s high, which suggests a strong bullish momentum.
The stochastic is showing an extremely overbought market but still displaying bullish.
The Japanese index began September in a sharp downward correction but found enough buying pressure around 22,020 to reverse and since then it has been in a strong upward rally that broke above 24,200 the previous 2018 high made in January. Now the Nikkei 225 is sailing in uncharted waters making new year-to-date high at 24,510 and the next Fibonacci expansion is at 26,122, however, we may see a downward correction before another move upward.
Written by Hugo O’Neill, External Analyst
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