199920th December: Nothing very exciting to report. The index is well supported and our next target of 21,000 - 22,000 is still valid.
Current prediction
Short term: double bottom pointing to 19,700
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid (not shown).
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
29th November: The index is still fighting with resistances in the long term daily charts. Once these obstacles are passed, we can confirm a target of 24,000. One of the funds has already broken out of a new pattern.
Current prediction
Short term: double bottom pointing to 19,700
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid.
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
22nd November: A long term resistance is operating. A jump on high volume will confirm a target of 24,000.
15th November: The index spent last week pulling back to the neckline of our short term pattern. 19,700 is still possible in the short term. But the long term daily chart shows heavy resistance at around 19,000.
Current prediction
Short term: double bottom pointing to 19,700
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid.
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
8th November: The long term resistance that stretches back to 1996 has finally broken. The path is now clear for a rally to 18,800. At this point, a reverse head and shoulders could propel the index to 24,000.
Current prediction
Short term: none
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid.
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
25th October: The index did nothing much during my absence. The yen is also sitting pretty. No exciting developments to report.
Current prediction
Short term: none
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid.
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
11th October: The index is not giving any clear signals this week. The major phenomenon to watch is a long term resistance shown on the long term daily chart, below, in black. If that pops on high volume, we could see a continuation of the current rally. Short term resistance is at around 19,250.
Current prediction
Short term: none
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid.
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
4th October: After briefly flirting with disaster, our bull is now safely back above the neckline of our reversal pattern pointing to 22,000.
Current prediction
Short term: double top - cancelled
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still valid.
2. A reverse head and shoulders points to 22,000.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
27th September: The index has made a double top pointing to 15,500. But the index is sitting on long term supports at the moment. If the index rebounds, our long term predictions will be confirmed. If the index falls further this week, we will have to cancel them.
20th September: The index is now sitting on a long term support at 17,000. I do not expect this support to fail. If it does, we can expect 15,500. The more likely scenario is consolidation at the current level for as much as two months before a rally to 21,000. If the yen passes 100, a prediction of 70 will become valid.
13th September: The index is supported well on a medium term channel. Good chance of rallies this week. But the index is still facing the long term resistance at 18,400 (which, you might recall, defeated one of our recent short term bullish predictions).
Current prediction
Short term: none
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still possible this month or next month.
2. A reverse head and shoulders points to 22,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: resistance at 112 - 108.
30th August: Long term resistance stopped the index reaching short term target at 19,000, last week. We could now see a period of consolidation. However, long term targets are all valid. I would therefore not expect the index to fall below 17,000.
Current prediction
Short term: reverse head and shoulders points to 19,000 - cancelled
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Still possible this month or next month.
2. A reverse head and shoulders points to 22,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: resistance at 112 - 108
23rd August: The index has a good chance of reaching 19,000 in the short term if it can pass a long term resistance at 18,300 - 18,400.
Current prediction
Short term: reverse head and shoulders points to 19,000
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Good chance as early as August.
2. A reverse head and shoulders points to 22,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: resistance at 112 - 108.
16th August: The recent pullback to and turn on the neckline of the long term reversal pattern confirms the target of 22,000. The head and shoulders top pointing to 16,300 is cancelled, due to the falling wedge, which broke out today.
Current prediction
Short term: wedge points to 18,600
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Good chance as early as August.
2. A reverse head and shoulders points to 22,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
9th August: The index has pulled back to the neckline of our long term reversal patterns. A short term pattern points to 16,300. If the short term pattern succeeds, the whole recovery scenario will be undone. However, there is a good chance that the index ends higher this week, and that the danger will be averted.
Current prediction
Short term: head and shoulders top points to 16,300. But there is a chance of failure.
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Good chance as early as August.
2. A reverse head and shoulders points to 22,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
2nd August: The Nikkei has pulled back to the neckline of our long term pattern that now confirms a target of 22,000. There's a very small chance that the index will sink to 16,200. But the greater probability is that we will see 19,000 soon, and perhaps 22,000 by the end of the year or beginning of next year.
19th July: Everything proceeding nicely to target and average volume for the Nikkei is quite healthy at 600 million shares per day. The yen is still vacillating. But another week or two should indicate direction for the currency.
Current prediction
Short term: reverse head and shoulders points to around 18,900
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Good chance as early as August.
2. A reverse head and shoulders points to 21,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: none
12th July: The index has made a short term pattern pointing to just under 19,000. The fund charts echo bullish sentiment.
Current prediction
Short term: reverse head and shoulders points to around 18,900
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Good chance as early as August.
2. A reverse head and shoulders points to 21,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
28th June: Not much to report this week, except that the yen is looking a little confusing. The Nikkei is well on course for targets.
21st June: So much for my symmetry scenario. So much for my "Nikkei going nowhere this year". The daily chart broke out of a reverse head and shoulders last week, in imitation of the weekly pattern. We could see 21,000 this year, and 19,400 could be reached as early as August.
Current prediction
Short term: none
Medium term: none
Long term daily chart: 1. A triple bottom points to 19,400. Good chance as early as August.
2. A reverse head and shoulders points to 21,000. Good chance this year.Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000
Currency: a reverse head and shoulders could take the currency to 110
14th June: The Nikkei rallied on record volume last Friday. The weekly chart reveals a reverse head and shoulders pointing to 21,000. With luck the daily charts will soon follow.
Current prediction
Short term: none
Medium term: double bottom points to 17,600. A chance that the target could be this week or next.
Long term: A triple bottom points to 19,000.
Long term weekly: (plotting Friday's close) reverse head and shoulders points to 21,000 - needs a few weeks above the neckline for confirmation. Ideally, we would see a rally to 18,000, a pullback to the neckline and then a turn. But such luxuries are not always to be had.
Currency: a wedge could take the currency to 110
7th June: The index looks like it is going nowhere this year, at least not far for the next few months. We could see a rally to 17,000 again. But I would not be surprised if such a rally were to fail. See the double top scenario in one of the fund charts, below.
On the other hand, a smaller companies fund has broken out of a couple of resistances and could be heading for positive territory.
Current prediction
Short term: double top points to 15,600 - but the target may have been satisfied.
Medium term: double bottom points to 17,600. Volume on breakout is good. If volume is sustained and long term resistances are overcome, we could see target reached in a few weeks. (But beware the formation of a tiny double top, the little pattern by which the Nikkei has previously failed nicely formed patterns.)
Long term: Bullish A triple bottom points to 19,000.
Bearish: Two patterns are still valid - but doubtful by reason of the double bottom.
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1, 1998. Satisfaction of the log target has, on previous occasions, completed the trend in question. i.e., we might not see the arithmetic target.)In summary, I would now only rely on the long term bearish predictions if the long term support at 12,500 - 13,000 were to break.
2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.Currency: head and shoulders top pointing to 137 - cancelled
31st May: The index has made another top pattern giving a target of around 14,600. However, the support on the long term daily chart at 15,000 would have a good chance of containing the index. A rebound at 15,000 would conduce to the long term scenario that I have outlined below, with a target of around 22,000.
The yen rebounded above the neckline of its top pattern, cancelling the target of 137.
24th May: A short term pattern points to 15,500. But we could see a correction to as low as 14,800, without jeopardizing chances for long term recovery.
10th May: The index made an impressive rally mid-week. For a moment I thought that our resistance at 17,200 would break. Indeed the short term chart suggests that target at 17,700 will be reached. But the long term resistance is a strong one, suggesting that we won't see a close above 17,200 for a few months yet. Long term targets are still valid and my scenarios still look good.
3rd May: A short term double top could be forming. A fall below 16,400 would confirm the short term correction.
26th April: A new shoulder is possibly starting to build, in line with my long term reversal scenario. This can be seen rather clearly on the fund charts. The upside is 21,000 early next year. A possible double bottom could see the index jump to 30,000 in the year 2001.
19th April: The index is proceeding nicely to target. Volume is still healthy at around 800 million shares per day.
14th April: The Nikkei is still healthy. However, there is strong resistance at the 17,100 - 200 level, over which the index might not pass for the remainder of this year.
26th March: A little pullback to the neckline of our medium and long term patterns confirms the neckline of our reversals. If we do not see a break above 17,000 soon, symmetry (in the long term daily scenario) could keep the index in a range between 14,500 and 16,500 for the rest of this year.
Current prediction
Short term: none
Medium term: double bottom points to 17,600. Volume on breakout is good. If volume is sustained and long term resistances are overcome, we could see target reached in a few weeks. (But beware the formation of a tiny double top, the little pattern by which the Nikkei has previously failed nicely formed patterns.)
Long term: Bullish A triple bottom points to 19,000.
Bearish: Two patterns are still valid - but doubtful by reason of the double bottom.
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1, 1998. Satisfaction of the log target has, on previous occasions, completed the trend in question. i.e., we might not see the arithmetic target.)In summary, I would now only rely on the long term bearish predictions if the long term support at 12,500 - 13,000 were to break.
2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.Currency: none
22nd March: The huge surge of volume over the past two weeks and the breakout from a long term triple bottom suggest that the Nikkei has made a long term reversal. But there is stiff resistance approaching. Although we have a target of 17,500 medium term and 19,000 long term, the index could pull back at 16,600 to make a larger pattern over the course of the next few months.
Current prediction
Short term: none
Medium term: double bottom points to 17,600. Volume on breakout is good. If volume is sustained and long term resistances are overcome, we could see target reached in a few weeks. (But beware the formation of a tiny double top, the little pattern by which the Nikkei has previously failed nicely formed patterns.)
Long term: Bullish A triple bottom points to 19,000.
Bearish: Two patterns are still valid - but doubtful by reason of the double bottom.
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1, 1998. Satisfaction of the log target has, on previous occasions, completed the trend in question. i.e., we might not see the arithmetic target.)In summary, I would now only rely on the long term bearish predictions if the long term support at 12,500 - 13,000 were to break.
2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.Currency: none
15th March: All bearish targets of 10,800 and below are on hold after a medium term reversal pattern, with huge volume, has broken out. The reversal points to 17,500. There are strong resistances at 16,600, 17,000 and 17,400. But the fund charts add fuel to the argument that the Nikkei has turned the corner and that 13,000 last October was the bottom of the market.
Current prediction
Short term: none
Medium term: double bottom points to 17,600. Volume on breakout is good. If volume is sustained and long term resistances are overcome, we could see target reached in a few weeks. (But beware the formation of a tiny double top, the little pattern by which the Nikkei has previously failed nicely formed patterns.)
Long term: Two patterns are still valid - but doubtful by reason of the double bottom.
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1, 1998. Satisfaction of the log target has, on previous occasions, completed the trend in question. i.e., we might not see the arithmetic target.)In summary, I would now only rely on these long term bearish predictions if the long term support at 12,500 - 13,000 were to break.
2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.Currency: none
8th March: Short term index patterns and one long term fund chart give rise to the scenario that the market has seen its low at 13,000 and that a long term reversal is upon us. However, there is still a chance that the index will see 10,800 by the end of the year.
Current prediction
Short term: triangle pointing to 15,400
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - But check out the long term supports at 13,000. This is now questionable, due to the bullish short term prediction and the lack of time left for the prediction to be fulfilled. But it is still technically valid.
Long term: Two patterns are still valid - but questionable for the reasons mentioned in the medium term above:
1. head and shoulders with arithmetic target of 11,923, (13,211on logarithmic scale - passed on October 1, 1998. Satisfaction of the log target has, on previous occasions, completed the trend in question. i.e., we might not see the arithmetic target.)In summary, I would now only rely on these long term bearish predictions if the long term support at 12,500 - 13,000 were to break.
2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.Currency: none
1st March: Take a look at our first fund. It soared last week despite a sharp drop in the yen. All funds are now looking rather bullish. But the index has not given similar clues.
Current prediction
Short term: none
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - But check out the long term supports at 13,000.
Long term: Two patterns are now valid
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: target of 80 is cancelled.2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
But see the long term supports at the 12,500 to 13,000 level.
8th February: It's a confusing market at the moment. We have a new triangle that could either confirm our long term triangle log target of 10,400, or, if it breaks upside, we could see a premature end to the bear market. The fund charts are still bullish, but two of them are stuck on long term resistances. That often spells the end of a medium term rally in a long term bear market (as appears now to be the case in the ASEAN markets, Hongkong and Korea).
The only clear indicator is the Japan Smaller Companies Fund that I follow. It has unequivocally made a bottom. But it's a fund of less significant companies. The tail is hardly likely to wag the elephant.
Thus we will have to await a week or two or three of uncertainty. Meanwhile, the trend is still down.
1st February: The index is on track for our target of 14,700 and perhaps beyond. However, the long term daily chart shows resistance. The yen is teetering on the edge of an enlarged neckline. If it weakens by a few more percent, our prediction of 80 will be cancelled. But for a three-year pattern, we should allow a little more time to be sure.
25th January: A short term pattern has erased our previous short term target of 12,600. At the same time, our target of 12,126 has only ten weeks left within which to reach target. Watch the fund charts, which suggest that the market has made a long term bottom. One such chart is approaching a long term resistance. If this resistance is overcome, the long term reversal will be confirmed. Note also the long term supports shown in the long term daily and weekly charts.
Current prediction
Short term: reverse head and shoulders pointing to 14,700.
18th January: Nothing significant occurred last week. The index pulled back to the neckline of our short term pattern and the currency pulled back towards the neckline of its long term pattern.
11th January: Our daily charts and patterns still point down. But our funds are now giving long term bottoming patterns. There is also good long term support at the current level. So there is a chance that the Nikkei has made a bottom and will soon recover without going to 10,500. The yen appears to be appreciating to 80.
Current prediction
Short term: head and shoulders top pointing to 12,700.
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - But check out the long term supports at 13,000.
Long term: Two patterns are now valid
1. head and shoulders with arithmetic target of 11,923, (13,211on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: reverse head and shoulders pointing to 802. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
But see the long term supports at the 12,500 to 13,000 level.
199821st December: The Nikkei has found support in a new medium term rising trend. Check out the medium term daily chart. The short term picture is ambiguous. Our head and shoulders top pointing to 13,800 is still valid, but the pattern pointing to 16,600 is not yet quite cancelled.
14th December: Strange tidings for the Japanese market. The market looks likely to weaken but the currency could surge again. Is this possible? Between July and October the Nikkei fell from 16,700 to 12,900. During the same period, July to October of this year, the currency went from 146 to 112. Thus it is possible that the currency could strengthen to 83 while the Nikkei goes to 12,126. There must be a simple explanation for the divergence. (Demand for yen increases while demand for equities weakens. I suppose the money is going elsewhere than the stock market. Or maybe the money supply is drying up. Does anyone know the answer?)
Current prediction
Short term: head and shoulders top pointing to 13,700, cancelling our reverse head and shoulders pointing to 16,600.
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - I am still expecting this.
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: none2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
7th December: The Nikkei is in a short term bullish mode but the long term is still decisively down. Our recent prediction of 16,600 has not been accompanied by good volume, reducing the chances that the Nikkei will slug of the bearish trend.
Current prediction
Short term: reverse head and shoulders pointing to 16,600 but with poor volume. Low probability unless volume picks up.
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - I am still expecting this.
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: none2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
18th November: The index has broken out of a short term pattern that points to 16,600. But volume is not good. If it picks up in the next few days, we could see more substance to the rally. But otherwise, the current rally could be dismissed as another testing of the resistance at 14,500.
Current prediction
Short term: reverse head and shoulders pointing to 16,600 but with poor volume. Low probability unless volume picks up.
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - I am still expecting this.
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: none2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
4th November: Weak volume lessens the chances that the Nikkei will shrug off the bear and head for 16,800. But one of the funds has broken a stiff resistance. So there's a chance that something is brewing.
Current prediction
Short term: none
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126 - I am still expecting this.
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: none2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
19th October: Two short term patterns have broken upside. The index could recover to 14,400 in the short term and possibly 15,200.
Current prediction
Short term: a triangle pointing to 14,400 and a wedge pointing up to 15,200.
Medium term: Triangle pointing to 11,633 by April 1999. Log target is 12,126
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale - passed on October 1) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: Prediction of 155 cancelled.2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing on an arithmetic scale to 6,086 (long term weekly) and 9,085 on a log scale.
12th October: The Nikkei rally last week was a mere flash in the pan. It disappeared as quickly as it came, leaving the index in negative territory for the week. It is now heading for the next medium term target, a triangle with log target at 12,126. Then we might expect a short term target of 11,800, which would pass the long term head and shoulders target of 11,923.
Some good supports could support the index during the early part of the week. A new wedge could take the index even higher in the short term. However, there is a high chance that the target of 12,126 will be met.
5th October: Our long term double top is now valid. Expect at least the logarithmic target of 9,085 to be reached before the Japanese misery ends. And be prepared for the worst case scenario: the arithmetic target of 6,000.
The short term looks bearish. A new head and shoulders top has broken downside and the year long support has broken. There is a good chance that the index will hit 12,000 by the end of this month.
Note also that the log target of 13,211 for our long term head and shoulders was passed last week.
21st September: The index and the currency are clouded by short term uncertainty. But the long term trend is still decidedly down.
14th September: Big fall on Friday took the index out of the safe zone. All the bearish targets are again valid.
7th September: Today the market rebounded above the neckline of our triangle pointing to 11,633. The pattern is on hold, pending further direction. The yen has made a double bottom pointing to 121. But the long term resistance at 131 needs to break before attainment of the target can be expected.
Current prediction
Short term: head and shoulders points to 12,700 by October
Medium term: Triangle pointing to 11,633 by April 1999. - on hold
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: Prediction of 155 cancelled. Tentative target of 121 by way of double bottom. A break above 131 will increase the chances.2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing to 6,086 (long term weekly)
31st August: The Nikkei fell out of bed last week, breaking the support at 14,500, and breaking a short term pattern pointing to 12,700. Our medium term triangle broke out, giving a target of 11,630. The yen is likely to be contained at around 140.
Current prediction
Short term: head and shoulders points to 12,700 by October
Medium term: Triangle pointing to 11,633 by April 1999.
Long term: Two patterns are now highly likely:
1. head and shoulders with arithmetic target of 11,923, (13,211 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.Currency: Yen could go to 155.2. A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
3. Double top pointing to 6,086 (long term weekly)
24th August: The Nikkei is still in the safety of a symmetrical triangle. But the chances are that the index will break downside from the triangle, confirming the fall to 12,000.
Current prediction
Short term: none
Medium term: 11,923, (13,211 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. This will be cancelled if the index breaks 17,500 on strong volume.
Long term: A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
Currency: Yen could go to 155.
12th August: The Nikkei had a good chance of breaking out of its bearish spiral in March. But it failed. Now the second opportunity to escape the bear has evaporated with diminishing volume. I'm pessimistic again.
Current prediction
Short term: double top pointing below 15,000.
Medium term: 11,923, (13,211 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. This will be cancelled if the index breaks 17,500 on strong volume.
Long term: A symmetrical triangle which has broken out with a minimum target of 7,760 (log chart would give a target somewhat higher at 10,541). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
Currency: Yen could go to 155.
3rd August: Nice ambiguity to weigh up here: On one hand:
I'm afraid the chances are that the rally isn't going to happen.Short term patterns point up to 17,800. A break above 16,800 would confirm the move. 17,800 would cross the neckline at 17,400, giving a potential target of 20,000. On the other hand: volume for a double bottom, taking the index to 20,000, is weak. This single fact makes the rally less likely. Furthermore, there is a possible triangle brewing in the weekly chart that would see the index fall to 12,700. A fall to 15,000 would set this scenario in motion. Current prediction
Short term: double bottom pointing to 17,300. Look out for a double top interrupting the target.
Medium term: 12,000, (13,211 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. This will be cancelled if the index breaks 17,500 on strong volume.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,540). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
Currency: Yen could go to 155.
27th July: Possible ascending triangle could take the index higher to 17,900. But resistance at 17,400 is still strong.
22nd July: Possibly more juice in the current rally. The fund chart suggests further rises. But I see the spectre of a double top curtailing further gains.
Current prediction
Short term: double bottom pointing to 17,300. Look out for a double top interrupting the target.
14th July: The index looks like it might still have a little power left in the current rally. What happens then depends on whether the index reaches 17,400 on sustained high volume. If it does, we could see a breakout to higher ground. The presumption is against such a rally. The long term bearish targets are both still valid. Only a break above 19,500 on high volume would erase these predictions.
I've been doing a little research on Japanese charts as of late. A surprising number of failures have occurred during the last three or four years. This might bode well for the index, if the current bearish patterns fail. More of this in the next few weeks.
Current prediction
Short term: double bottom pointing to 17,300.
Medium term: 12,000, (13,150 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. This will be cancelled if the index breaks 17,500 on strong volume.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
6th July: A valid short term pattern points to 17,300. Volume is good. At that point we can expect resistance. If it breaks on continued high volume, we can expect 19,500 and an end to the gloom prediction of 8,000. There is also a chance that the yen will strengthen to 125. But a fall to 141 reinforces the expectation that the currency will see 155 before the end of the year.
Current prediction
Short term: double bottom pointing to 17,300.
Medium term: 12,000, (13,150 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. This will be cancelled if the index breaks 17,500 on strong volume.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. This will be cancelled if the index passes 19,500 on strong volume.
29th June: The Nikkei is building up volume nicely, giving cause for optimism in the short term. However, the yen is back on track to 155.
Current prediction
Short term: triangle pointing to 14,300. Cancelled.
Medium term: 12,000, (13,150 on logarithmic scale) the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
22nd June: The rebound in the Nikkei last week gives a small chance that the pattern pointing below the important neckline of 14,500 will be cancelled. There are other possible indications that the market will hold, such as a triangle that pointed below the crucial support last year that failed.
As for the yen, speculators have been beaten off, but I doubt that government intervention will reverse the trend of the yen, which is weakening.
1st June: The Yen is clearly heading to 155. The index did nothing special last week.
Technical analyst Anant Tantavanich, writing in the Bangkok Post, still expects the Nikkei to surge to 20,000 by July. I see such a prospect as very remote. All the signs point down. But I will keep an eye open, just in case.
Current prediction
Short term: triangle pointing to 14,300.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: 155 now confirmed.
25th May: The Nikkei moved up a little last week, giving rise to a possible shake-out: ie, the possibility that our low target of 14,300 might fail. Further evidence this week is required.
Current prediction
Short term: triangle pointing to 14,300
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: The yen will probably weaken to 152. But if it strengthens beyond 122, we can expect 110.
11th May: First target of 15,100 reached last week. The next one is crucial. It will break the important support at 14,500, after which there is no looking back before 12,000.
Current prediction
Short term: two triangles: one pointing to 15,100 (reached last week), one pointing to 14,300
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: The yen will probably weaken to 152. But if it strengthens beyond 122, we can expect 110.
4th May: The yen has shown a clear path to 155 (see below) and a short term pattern points the index to 14,200.
Current prediction
Short term: two triangles: one pointing to 15,100, one pointing to 14,200
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: The yen will probably weaken to 152. But if it strengthens beyond 122, we can expect 110.
27th April: A new short term pattern is brewing. It has not yet broken. But its chances of breaking are increased by the valid short term triangle pointing to 15,100. As such, the new pattern is the first short term indicator that the important support at 14,500 is set to break.
Current prediction
Short term: a triangle pointing to 15,100
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: The yen will probably weaken to 152. But if it strengthens beyond 122, we can expect 110.
20th April: The Nikkei is heading towards the short term target of 15,100
Current prediction
Short term: a triangle pointing to 15,100
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: The yen will probably weaken to 152. But if it strengthens beyond 122, we can expect 110.
11th April: Those who were hoping that the index might escape the bearish fate that I have been predicting for several months now have no basis for such hope. The patterns pointing to 20,000 have failed. The second quarter, which I have suggested as the probable time for the crucial 14,500 support to break, is now upon us. The Nikkei is stuck deep in the quicksand and only a head (not even a shoulder) beyond disappearing into the murky depths.
Current prediction
Short term: a triangle pointing to 15,100
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Note that the medium term double bottom pointing to 19,000 is cancelled
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example.
Currency: The yen will probably weaken to 152. But if it strengthens beyond 122, we can expect 110.
20th March: Weakening volume makes a reversal unlikely. But the weekly chart is still holding on to its double bottom.
Current prediction
Short term: none
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern. But the medium term weekly chart shows a small reverse head and shoulders pointing to 20,000. If this pattern breaks, we can cancel the gloom prediction.
Note also the medium term double bottom pointing to 19,000. It is still valid.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. If the head and shoulders bottom breaks, we can suspend this prediction. If the index reaches 20,000, we can cancel it.
16th March: So the government is giving money away? According to news reports, the Japanese government is determined to push the index up to the window dressing level of 18,000 by the end of this month.
It looks cunning in a way. 18,000 would break through the neckline of our patterns pointing to 20,000. But one must be very suspicious of such follies. Governments can't support markets for long. The whole thing could about face and collapse. It could be a good time to offload stock.
Check out the long term picture of the fund chart, which last week gave the first confirmation of the long term gloom scenario. It shows an impending fifty percent fall.
Current prediction
Short term: none
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern. But the medium term weekly chart shows a small reverse head and shoulders pointing to 20,000. If this pattern breaks, we can cancel the gloom prediction.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. If the head and shoulders bottom breaks, we can suspend this prediction. If the index reaches 20,000, we can cancel it.
9th March: Volume has fallen off since February, giving less hope that the index will break 17,500 on strong volume. If this were to happen, we would have a valid target of 20,000 and so put on hold our gloom scenario of 12,000 and then 8,000. But, on the other hand, volume has risen over the last few months, such that the weekly chart gives a valid prediction of 19,000. So we will have to wait and see which force prevails.
Current prediction
Short term: none
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern. But the medium term weekly chart shows a small double bottom pointing to 19,000. Volume has risen in recent weeks to support the pattern. But a break above 17,100 is needed to confirm the pattern. Note that the market could rise to 19,000, the target of the small double bottom, without erasing the danger of 8,000, in the long term pattern discussed below. But it would be an encouraging sign.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
2nd March: The index reached our short term target of 16,000 last week and is now making a possible right shoulder for a reversal pattern that could end our bearish prediction. Gloom scenario of 8,000 is not yet cancelled.
Current prediction
Short term: none
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
23rd February: Sideways drifting last week did nothing much for the index.
Current prediction
Short term: triangle pointing to 16,000
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
16th February: The index is heading back to 16,000. Where it goes from there is anyone's guess.
Current prediction
Short term: None
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
10th February: A small reverse head and shoulders pattern is developing. If it breaks, it will point to 20,000, taking the index above the long term pattern that points to 8,000. But for the moment, the index has merely pulled back to the head and shoulders top that points to 12,000.Current prediction
Short term: None
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
31st January : Short term chart shows a possible reverse head and shoulders that could take the index up to 19,000, giving hope of cancellation of the 8,000 target.
Current prediction
Short term: None
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
26th January : A small chance at 19,000, shown by the weekly chart. But even 19,000 will not cancel the doom scenario. The index needs to break 19,500 decisively to cancel the melt-down scenario.
Current prediction
Short term: Triangle pointing to 13,500 is cancelled by double bottom target. Resistance at 17,100 is crucial.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes
19th January : The rally of the last few days gives us a target of 16,750. But this target, alone, does not cancel the doom scenario. Read on.
Current prediction
Short term: Triangle pointing to 13,500 is cancelled by double bottom prediction.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
12th January : Still a sideways mode. This could carry on until April if the channel has its way. But who knows, it is hovering dangerously close to the precipice and could fall off at any time.
Current prediction
Short term: Triangle pointing to 13,500.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000 (log chart would give a target somewhat higher at 10,000). Another perfect text book example. The only hope of averting this disaster would be if the support at 14,500 intervenes.
5th January: Nothing to write home about. The market slept much of last week (as did I).
14,500 provided some support intra day one day last week. But I don't see it holding. Nothing much new.
Current prediction
Short term: Triangle pointing to 13,500.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails. A classic text book pattern.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. The only hope of averting this disaster would be if the support at 14,500 intervenes.
199729th December: 14,500 provided some support intra day one day last week. But I don't see it holding. Nothing much new.
Current prediction
Short term: Triangle pointing to 13,500.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. The only hope of averting this disaster would be if the support at 14,500 intervenes.
22nd December: The short term triangle that we have been following broke out last week. Its target is 13,500, adding to the probability that the index will fail at the crucial 14,500 point. Below 14,500, there is no good support to prevent the fall to 8,000.
Current prediction
Short term: Triangle pointing to 13,500.
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. The only hope of averting this disaster would be if the support at 14,500 intervenes.
8th December: Nothing to get excited about. The market turned back down at the neckline of the large head and shoulders pattern. The only hope is a small reverse head and shoulders pattern in the short term. Otherwise disaster.
Current prediction
Short term: 14,500, the low of June 1995 will no doubt give some support
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. The only hope of averting this disaster would be if the support at 14,500 intervenes.
1st December: The index closed today at 17,000. No cause for jubilation my dear friends. The index merely pulled back to the neckline of the head and shoulders pattern.
The short term chart reveals a reverse head and shoulders pattern. If the index breaks 17,250 in the next few days, on volume that is high, around 800 million shares, we will have a prediction of 19,250. Whether or not such a move changes the long term picture, or not, depends on the time frame of the move. But it is too early to speculate now.
No one has yet responded to my request: If you would care to comment on the implications of a fall to 8,000 on the rest of the Asian markets, or if you know of any good web sites on the topic, please contact me. I'm curious as to whether the fall would spell a global wipe-out.
Current prediction
Short term: 14,500, the low of June 1995 will no doubt give some support
Medium term: 12,000, the head and shoulders target shown in pink on the chart below, which will occur if the 14,500 support fails.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. The only hope of averting this disaster would be if the support at 14,500 intervenes.
17th November: 14,500, 12,000 and 8,000. These are the major targets that have been confirmed by the recent falls of the index. The last straw to which I cling is the possibility that the support at 14,500 will hold and buoy the market into positive territory. But this is a vain hope. The technical signs that the index will fall below this level are too clear to ignore.
Current prediction
20th October: Not much of excitement last week. The index broke out of its falling wedge, adding a few points, but not sufficient to change to big picture.
The fund chart sheds a glimmer of hope on the dismal picture.
Current prediction
Short term: Head and shoulders top forming. Target of 14,700. Not broken yet.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. A false breakout is the only hope of reprieve.
13th October: A possible falling wedge might avert the breakout of the head and shoulders top that points to 14,700. But the long term picture still points to 8,000.
The fund chart sheds a glimmer of hope on the dismal picture.
Current prediction
Short term: Head and shoulders top forming. Target of 14,700. Not broken yet.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. A false breakout is the only hope of reprieve.
26th September: Rises last week didn't help to erase the doom prediction. Short term, the head and shoulders top is still looming. Medium and long term we have a mere pullback to the neckline of our symmetrical triangle.
Current prediction
Short term: Head and shoulders top forming. Target of 14,700.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000. A false breakout is the only hope of reprieve.
2nd September: Nothing happened last week to suggest other than that the index is heading for 8,000.
Current prediction
Short term: Head and shoulders top forming. Target of 14,700.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000.
15th September: Surprisingly, the triangle that we had been plotting for several months broke last week. However, it did not break up through the resistance. It fell through the support of the triangle, portending a fall to 8,000. The breakout was unambiguous. It might be wise to wait for a week or two to make sure that the break out is real, however there is no history of false breakouts with these Nikkei triangles..
Current prediction
Short term: Head and shoulders top forming. Target of 14,700.
Long term: A symmetrical triangle which has broken out with a minimum target of around 8,000.
8th September: The fifth turn of our symmetrical triangle materialized on schedule. We now expect the market to test 20,000. A breakout upside suggests 30,000.
Current prediction
Short term: The index should now test the 20,000 level. With luck it will break out upside.
Medium term: A symmetrical triangle forming. Breakout upside portends a minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Downside would suggest a fall to 8,000.
Long term: We have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000 and a symmetrical triangle, which points to 30,000.
1st September: The index reached our target of 18,000. Now we must wait and see whether we get the reversal that will take the index up through the 20,000 level, then past the 24,900 target and finally, to our hoped-for objective of 30,000; or, whether the index keeps falling, in which case, 8,000 will be our sorry end.
Current prediction
Short term: none yet, our objective being reached, all eyes on the next move.
Long term: A symmetrical triangle forming. Breakout upside portends a minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Downside would suggest a fall to 8,000.
Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000 and a symmetrical triangle, which points to 30,000.
25th August: A little triangle on the daily chart shows a target of 18,000. The weekly target is already met. Accordingly, a close at 18,000 this Friday would be disastrous. The best scenario would be a fall to 18,000 mid-week with a recovery by Friday.
18th August: The little bit of retracement last week doesn't take us out of the woods. The index is likely to test 18,000 again before closing, one fine Friday, around 18,500.
Current prediction
Short term: Head and shoulders pointing to 18,500.
Long term: hope for a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000 and a symmetrical triangle, which points to 30,000.
11th August: A little setback. The index has fallen through a small head and shoulders pattern that could see the index testing 18,500. This point corresponds to the support on our long term chart. I expect the index to hold at this point. Otherwise we would be in danger of a fall to 8,000. That would be too terrible to contemplate ( and therefore unlikely? but not impossible).
Current prediction: Short term, a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000 and a symmetrical triangle, which points to 30,000.
4th August: Despite the nasty drop of 500 points last Friday, the index is still on safe ground. The shoulder that is currently being created, resembles that was made between May and November last year and could indicate the eventual path up.
28th July: Yes, well, the 30,000 prediction could be confirmed soon, but it could take a while also. Nothing major happened last week. Volume is falling off. That is not a good sign. But patience is the key to this market. Check out the fund charts below.
Current prediction: Short term, a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000 and a symmetrical triangle, which points to 30,000.
20th July: The long term chart could break out soon, giving us a target of 30,000. See below. Otherwise, the index is following the scenario shown in the medium term chart by the green line. Volume is starting to build up.
One of the funds has broken out of a reverse head and shoulders, portending further rises and adding fuel to the argument that we will soon get a prediction of 30,000. See below.
Current prediction: Short term, a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000 and a symmetrical triangle, which points to 30,000.
14th July: Nothing much to report. The index is following the path that we have projected. So far, so good.
8th July: As mentioned, last week, the index could fall to 19,500 and still remain safely within our bullish scenario. A break above 21,000 will confirm our breakout to 24,900.
Current prediction: Short term, a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000.
29th June: The index is facing stiff resistance shown by the blue descending channel. A fall back to 19,500 wouldn't hurt the long term prospects.
Current prediction: Short term, a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,900). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000.
23rd June: Slowly wending up a rising channel.
The weekly chart appears to have broken a reverse head and shoulders. Target of 23,500 goes right up to the long term resistance point.
Current prediction: Short term, a double bottom or a symmetrical triangle with minimum target of 21,400, (which will break out of a medium term reverse head and shoulders shown in green, with a target of 24,400). Long term, we have a reverse head and shoulders forming, which, if it breaks, will take the index to 29,000.
16th June: Hesitation at the current level is no cause for alarm. A bit of consolidation is giving us a right shoulder, shown in green, that will take the index up to 24,400, and beyond......
9th June: A shoulder is forming, as shown by the green line. A breakout will confirm our next target of 24,400.
2nd June: A new long term target of 29,000 is possible. The index is making a nice shoulder at its current level, completing a reverse head and shoulders pattern shown in green on the daily chart below. By reaching our target of 21,400 (pink and orange arrows), the index will break out of the green pattern, confirming the target of 24,400. A t the level of 24,400, the index will break through the long term reverse head and shoulders pattern (see the weekly chart below), giving a target of around 29,000.
Sounds good! But close inspection of the weekly chart, wherein the prediction lies, shows that the breakout of that pattern is not axiomatic.
26th May: A little consolidation last week prepares the index for further rises. Further consolidation around the blue broken line will give us a reverse head and shoulders with a higher target. Volume supports the possibility of a reverse head and shoulders making a long term reversal pattern.
20th May: The index is heading nicely towards our target. It has passed the resistance shown by the black broken line. A little consolidation is in order. Volume is picking up nicely throughout the chart, making the market ripe for a long term reverse head and shoulders.
12th May: The index is behaving nicely; a little pennant is forming that should take the index to target. The rise is contained in a nice channel. Volume is picking up also. Very NICE.
The yen has risen nicely, adding a few percent of value, in dollar terms, for those who bought into the market when the index broke out of its pattern a few days ago.
5th May: After much vacillation, the Nikkei finally showed its trend, breaking up and away, out of a nice reversal pattern. We can view the pattern as a symmetrical triangle or a double bottom. The target is the same in each case: 21,400.
28th April: Our symmetrical triangle is revealing more of itself as time progresses. It now resembles its parent triangle shown in dark green.
23rd April: A symmetrical triangle with wrong volume pattern.
8th April: We're still in this damn triangle.
28th March: Lots of up and down. But we're still in a state of limbo a far as a clear prediction is concerned. The danger is that, as the pattern approaches the apex of the triangle, the predictive value of the triangle diminishes. We could get a nasty false breakout. (They're a real pain in the bum!) So let's hope for a breakout this week.
24th March: We now have a nice big symmetrical triangle forming. It's just like the nasty big triangle that sent the index down in January. This could be a continuation pattern, in which case, we'll get another nasty, nasty, fall. Or, more positively, it could be reversal pattern, in which case it would portend a nice rise. We should know in a week or two.
Today's big fall (not shown on the chart) won't affect the pattern.
17th March: Our little head and shoulders may have met its objective intraday. This would be a saving grace. If the index closed at our target, it would have penetrated another neckline that would take the market down to 16,500. We'll have to wait and see.
10th March: We now have a little head and shoulders that suggests a return to 17,500. Our target of 19,500 seems to have failed by about 1.5%. The volume pattern supports the head and shoulders pattern: gradually decreasing from left shoulder to right shoulder then a pickup after breaking through the neckline at 18,400.
3rd March: Nothing exciting. Our target of 19,500 is still valid, with the caution of 15,800 still a possibility.
14th February: The index kept rising throughout the last few days. We now expect it to keep rising to our target of 19,500. A nice little shoulder could give us a reverse head and shoulders if volume picks up. But we are not out of the woods yet. A fall to 15,800 is not yet ruled out. Keep an eye on the yen. The G7 can't fix rates. 135 is still on the cards for the yen.
10th February: The index pulled back last week beyond the neckline of our possible double bottom. Thus we can only rely on the breakout from the symmetrical triangle for a reversal. As I have discussed previously, this breakout is not reliable.
The only encouragement that a reversal may be taking place is the fact that average volume is increasing. The green line in the chart below is a thirty day moving average, which shows an increase in activity. However, recent volume still isn't high enough to be convincing.
Anant says that "the odds are good" that the index "may not decline to 15,000". We'll have to wait and see.
3rd February: Well, we appear to have panicked last week. Contrary to our prognosis, the Nikkei appears to have made a double bottom. See the picture more clearly on the weekly chart below. Note, however, that volume has not picked up on the second bottom.
We may, instead have a new symmetrical triangle. This involves redrawing the borders from last weeks symmetrical triangle, making the breakout (down) into a turn. This, in fact, is what we did with the big triangle shown by the thick green lines in the chart. Eventually, we had a big enough picture to trust. But along the way there were all sorts of apparitions (including a reverse head and shoulders without the correct volume pattern).
Falling volume, such as we have in our latest triangle, would support the symmetrical triangle hypothesis. The black arrow shows the target of this pattern. I am, however, skeptical. We should wait for a larger picture to get a clearer idea as to whether the index has reversed or is merely consolidating.
Yen to weaken: Despite the fact that we appeared to have panicked last week, a scale down of stock holding would not have been foolish for those of us accounting in dollars or dollar based currencies. The yen has depreciated by several percent in the last few weeks. This erodes any gains that dollar accounts would make on the rebound of the index. As we pointed out last November 9, the yen is in a primary bear trend. It broke out of a reverse head and shoulders against the dollar that will take it to at least 130.
27th January: The Nikkei fell out a symmetrical triangle today, 27th January. We may now expect a new fall to 15,700 or thereabouts. Abandon ship!
20th January: That was a nice bottom for all of you who did a bit of fishing. Where next? We'll have to wait and see. The current consolidation activity could be preparation for a further plunge to 16,000. Or we could have reached a nice support on 17,300 from which the index will recover. Too early to tell.
13th January: The Nikkei hit both of our targets last week, in a surprising selling climax. We now have to wait and see whether it will consolidate and continue falling, or reverse. Such a steep fall in such a short time looks like a good buying opportunity. But Anant Tantuvanich warns of a possible further fall to the 15,000 level and urges waiting till February to enter the market.
The long term chart shows good support.
4th January: The index was closed for much of last week.
199623rd December: The head and shoulders (neckline 20,000) broke last Thursday, confirming our prediction. The charts all point to a target of around 17,500 or slightly below. Anant Tantuvanich thinks that this will occur in February next year.
16th December: One little pullback and down she goes. The very clear symmetrical triangle, shown in the chart by the green lines, points to a minimum target of 17,500. If the index falls below 20,000 (which our current prediction suggests), then we have a head and shoulders (neckline is the brown broken line). The target would be similar to that projected by our triangle.
The only possible salvation would be a "shakeout", ie, a false breakout on high volume. Only time will tell. But in this case, the index does not have much room to maneuver. A fall below 20,000 will confirm our head and shoulders, which is a more reliable of the two patterns.
10th December: The Nikkei broke out of a symmetrical triangle last week. On Monday 9th December, it merely pulled back to the neckline. The break out suggests a fall of 2,400 points to around 18,000.
Guru Anant, Bangkok Post, 9th December, warns of a sharp low in February 1997.
25th November: Nothing interesting this week in the index. But the funds below are making interesting movements.
16th November: Nothing new to report. The index is wiggling sideways. The fund chart below sends a more negative message.
November 9th: Our wedges scenario from the previous week is cancelled. (Wedges don't pull back like triangles, but rather, "fall in earnest" after their breakout). We therefore have a rising channel. A strong rise last Friday took the index up 2%. However, this rise isn't sufficient to preclude the scenario of a large head and shoulders, the neckline of which is marked by the brown broken line in the chart below. (The left shoulder is off the chart.) A strong move out of the channel may persuade us that the head and shoulders is not in the offing.
However, one should bear in mind the possibility that the yen will appreciate to 130 to the dollar in the next 12 months. If it does appreciate thus, any gains made on a long term investment would be erased for those holding dollar funds
Note that the fund chart, below the index, shows a pullback to the neckline of the descending triangle. The downward move predicted by that triangle is not, therefore, cancelled..
October: The Nikkei looks as though it fallen out of a rising wedge. The wedge is shown by the broken green lines. This is an intermediate reversal. Thus it doesn't negate our long term view that the index is headed for 27,000. But in the short term, the index is in danger of falling below 20,000. Compare the Nikkei chart with a chart of a major fund, below. This chart was started in October 1995. (It therefore covers a little over a year.) It is a daily chart of a Japan fund operated by a major mutual fund company based in Hong Kong. The chart shows three formations:
i. a head and shoulders top with a peak at $15.35. The arrow down to $13.00 corresponds to the minimum measurement. This has already been exceeded.
ii. Another little head and shoulders that should take the fund down to $12.70; and
iii. A descending triangle that looks like 12.40 is the minimum for the this fund.
The implications for the index are pretty bearish in the short term.
18th October: With a bit of luck, Japan will be making a reverse head and shoulders. If so, we should see the index move to 23,000. That would exceed the recent high of 22,800. Our long term target (mid 97) is around 27,000. Fingers crossed. (This appears hopeful now, in the circumstances indicated above.)
Guru Anant Tantuvanich still thinks that the Nikkei is in danger of a fall to 1600. No clear reason is given for the target. See Bangkok Post Monday 21s October.
History from 2000 - current year
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