Nikkei is the Japanese index for stocks. It is heavily traded in the Asian session and the Asian region. The strength of this indice is its volume and volatility. We have a high probable setup appearing for longs, which we will analyze on H4.

- Market structure: After breaking the resistance at $27,600, the structure shifted to bullish. From this breakout, the move towards the upper resistance of $28,600 looks clean and achievable. This resistance will be our potential target for longs. Our support is formed at $27,960, which is an extended correction for this impulse bullish move.

- Trendline: The descending trendline was breached earlier with force, opening and closing the candles above the trendline, hence, verifying the breakout buy of trendline. At the support level mentioned earlier, we take in the fact that trendline retest rests there. This adds to the second confirmation for the buys at support.

- Retracement: Our trading plan includes having the golden area of Fibonacci retracements. In case we don’t have it, we use the 61.8% ratio as well. Fortunately, we do notice that the retracement levels of 61.8-78.6% fall within the support region. The reason for this is the lower time period for drawing the retracement, as we ascertained the fresh levels of the swing points. This retracement gives us a third confirmation for buys.

- EMA's: EMA 50 has just broken out without a retest. This is a good sign because now we have the direction for the Nikkei to retest the EMA 50, which is predicted being on the support level. EMA 200 is still above the market. Once market retests the EMA 50, we have a direction towards testing the EMA 200 where one can book partial profits. That being said, we do dissect the inclusivity of the EMA 200 being broken as it has been tested 3 times previously. The more the tests, the more chances for it to be breached.

- RSI/CCI: Both oscillators are in the buying region. We can comprehend the fact that there is room towards the upside after the support is tested.

We have four confirmations of this trade. It makes it a high probability trade for the Nikkei.

Nikkei longs from $27,960

Jul 23 2021

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