Following a 15-year high on 23rd June, the Japanese stock index has given back some of those gains; correcting as much as 9% in the following 2 weeks. The closing high on 23/6 was 20874.
An attempt to make new highs on July 21/22 failed and the index has turned back into the Ichimoku cloud. The Tenkan-sen line is still above the Kijun-sen, which is bullish.
The overall trend is bullish and it is worth noting that Japanese equities have been one of the strongest performing asset classes in the word during 2015 – up by 16.5% year-to-date.
Should the index fall below 19850-19900 (Senkou Span B – the bottom of the cloud), it could signal more bearishness. Even more downside could be triggered by a fresh low below 19000 that could signal a 10% correction from the highs.
If price action climbs above the 20300 upper cloud on the other hand, fresh longs could be established. Fresh multi-year highs above 20900 would also confirm the bullish prospects.