The massive hit that the Japanese markets took today is probably best summarized in this return to the Nikkei 225 4-hour candle chart:
We’re getting “saved” here by the lower trend, after the GDP data forced a crash below the upper trend line. Not particularly good by any standards, but we’re still not in “horrible crash” territory. The Nikkei turned after touching 17 555, so 17 500 looks like a strong resistance, but we also get pretty strong support / resistance play at 17 100 as the intermediate range between the 17 450 level and the 16 750 level. There are a lot of support structures, so if there are movements that the market see as positive out of Abe’s cabinet, or out of the Nihonbashi headquarters of the BOJ, that should be enough to let the market shrug off the GDP data from a technical perspective.
In the currency markets, the yen is back on its weakening trend, going from around 115.5 to 116.2 to buy a US dollar in the last four hours, and the EUR/JPY bouncing after going below the 145 level. The euro also really doesn’t like its 21-day EMA, and has been rejecting gains above 1.25 as I expected after the European traders got back into the market to their first session of trading for the week. This whole setup should allow for greater levels in the Japanese markets if recent trends and correlations hold up, so even though the bucket of ice that GDP numbers provided to expectations today was indeed tempering any expectations of a northward climb, there are still technical, fundamental and political reasons that hitting the sell orders manically isn’t a surefire trade.
I will update a bit more later on the Shanghai – Hong Kong Stock Connect opening market action once the HKMA monetary base data is out for the day. Doing any analysis or forecasting without that data is a little bit like flying blind, and this week has enough expected events smattering by that I will want my forecasts to be accurate rather than quick where they can be. Have dinner or something until then and see you back when there is full daily data to bite into!