Nikkei 225 has recovered significantly from its recent low due to elections euphoria. Most of the Japanese polled do not like the incumbent Cabinet (including Prime Minister Noda), and the dissolution of the current Government brings much needed optimism that things will get better in Japan.
Green Line – Disapproval
Red Line – Approval
Source: NHK Survey
Hourly chart reflects the optimism, with price breaking back into 9,000 levels. However the topside of the wedge (daily chart) could act as resistance. Furthermore, it’ll be the confluence of the trading range 9,000 – 9,100, adding strength to the resistance level.
As Japanese companies are mainly exporters (as their domestic consumption is low due to their savings culture), a weak Yen is always good news for N225. Together with the election calls, there are also various pleas from Noda, Jojima and various other big wigs for more BOJ intervention. Currently Yen has broken 80.3 resistance, opening up 84.20 as a plausible target. Should USD/JPY continue the journey north, we should see bullish pressure pushing N225 higher as well.
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