Nikkei 225: How To Play This Ultra-Volatile Market In 2019?


The Nikkei 225 is one of the most volatile stock indexes. This brings opportunity but also huge risk. Do we see in 2019 opportunity or risk in the Nikkei 225? In other words what’s the safest way to play the Nikkei 225 ultra-volatile market in 2019? Note that the Nikkei 225 is a developed market, and not one of the emerging stock markets. That’s the reason it does not qualify in our top 4 emerging markets 2019.

This article is focused on chart analysis of the Nikkei 225 index. We will not look into fundamentals, partially because fundamentals are a lagging indicator. At InvestingHaven we want to focus on leading indicators, and be (way) ahead of the herd by spotting new trends as they arise ‘in real time’.

The timeframe we believe is most appropriate to answer the question how to play the Nikkei 225 in 2019 is the weekly chart which shows the tactical trends. That’s the Nikkei 225 chart embedded in this article.

The volatile nature of the Nikkei 225, and what it means for investors who want to play this market, becomes immediately clear. A high number of uptrends and downtrends are visible. The super-rally in 2013 is of course very seducing, sets high expectations with investors, which is the reason why it comes with risk!

How To Play The Nikkei 225 Market In 2019?

The most important thing that stands out for 2019 is the ongoing downtrend indicated with the purple lines representing the ongoing falling channel. It is by far the most important aspect to consider for decisioning. This downtrend may end or continue, lots will depend on how global markets evolve, and we continuously monitor the global dominant market trend in our 15 leading indicators section.

The ongoing downtrend in the Nikkei 225 seems to need another test at resistance and support before it ends.

Assuming markets stabilize in the coming months, including the Nikkei 225 market, we would look into how rates in Japan evolve combined with the first higher low that the Nikkei 225 sets. That said, there are couple of combinations possible:

  1. If the Nikkei 225 sets a sharp higher low after moving out of its falling channel and it would coincide with rising Japanese 10 year rates it might be ultra bullish for the Nikkei 225.
  2. All other scenarios will be neutral of mildly bullish.

Because of the volatile nature of the Nikkei 225 we only recommend having exposure to it in the first sccenario.

Nikkei 225


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