The Nikkei 225 remains under heavy technical selling pressure, with the index moving into negative territory for the year and reaching levels not seen since early 2017.
Nikkei 225 analysis shows that the index could fall towards the 15,500 level as technical selling pressure increases.
Nikkei 225 medium-term price trend
The Nikkei 225 remains in freefall alongside other key global indices as investors react to the worsening spread of the coronavirus.
On a percentage basis, the Nikkei 225 is trading down close to 25 from its 2020 price peak, and around 10 per cent lower on the month so far.
Nikkei 225 technical analysis shows that the breakout below the 20,382 level has triggered a bearish head-and-shoulders pattern into action.
The overall downside projection of the bearish pattern suggests that the Nikkei 225 could fall towards the 15,500 level.
Technical indicators are also pointing lower, with the MACD indicator on the weekly time frame currently issuing a strong sell signal.
Nikkei 225 short-term price trend
Nikkei 225 technical analysis shows that the index has a strong bearish bias while the price trades below the 22,460 level.
The four-hour time frame shows that the recent decline has created price gaps and also bullish MACD price divergence.
Price gaps are seen around the 20,580, and 23,400 levels, and will likely be closed at some stage if a relief rally takes hold.
The four-hour time frame also shows that bullish MACD price divergence has formed and extends until the 22,500 technical area.
Overall, the decline in the Nikkei shows few signs of stopping. However, the price gaps and positive divergence points to a possible correction once meaningful support is established.
Nikkei 225 technical summary
Nikkei 225 analysis shows that the index could decline towards the 15,500 support level before a recovery takes hold.