FxWirePro: Bears eyeing 9-10 percent drop in Nikkei 225

After rising for an eight consecutive week, the Japanese benchmark stock index Nikkei 225 is down for a second straight week.  After reaching around 23,400 area (JPN225), which was the highest level for Nikkei since 1991, the index has declined rather sharply and is currently trading at 21910 area. While it has already declined by more than 6 percent, our calculations at FxWirePro suggests that bears are eying another 9-10 percent decline in the index.

Bears are looking to push Nikkei below 20,000 area, however, we suspect that bullish support would start arriving around 20,500 area. While the Japanese economy and the policy of the central bank remains favorable for the index, a correction has been long due. Moreover, in the last leg, Nikkei has risen too much, too fast.

As a matter of fact, a global correction in indices has long been due and that would add pressure on Nikkei.

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