The Nikkei 225 is continuing its multi-week recovery, with the index on course to end the month with gains of nearly 10 per cent.
Nikkei 225 analysis shows that the index is approaching its trend-defining 200-day moving average.
Nikkei 225 medium-term price trend
The Nikkei 225 index is starting to firm above the 21,000 level due to improving sentiment towards global stock markets.
The index looks set to post its second month of strong gains, and is now trading over 30 per cent above the March trading low.
Nikkei 225 technical analysis shows that bulls are increasingly likely to test towards its 200-day moving average, around the 21,670 level.
Traders may look to book some profits around the index’s 200-day moving average, due to the strong advance from the March low.
Key technical resistance for the Nikkei 225 above the 200-day moving average is found at the 22,300 and 23,800 levels.
Nikkei 225 short-term price trend
Nikkei 225 technical analysis shows that the index has a strong bullish bias while the price trades above the 21,000 level.
The four-hour time frame shows that a bullish inverted head-and-shoulders pattern has been activated.
According to the size of the inverted head-and-shoulders pattern the Nikkei 225 could rally towards the 21,600 level.
The four-hour time frame also shows that bullish MACD price divergence has formed. The bullish MACD price divergence currently extends the 22,500 technical area.
With this in mind, it is still possible that the Nikkei 225 could rally past the 21,600 level and reverse the bullish price divergence.
Nikkei 225 technical summary
Nikkei 225 analysis shows that the index could test towards the 21,600 technical area. Bullish MACD price divergence is also warning of a strong advance towards the 22,500 area.