[Japanese Stocks] Which will break, the 5-day or the 25-day Moving Average, momentum holds the key | Hiroyuki Fukunaga's Technical Analysis Course You Can No Longer Ask | Moneyクリ Monex Securities Investment Information and Media Useful for Money

Whether it can maintain above the 25-day Moving Average is the key to the bounce back continuing.

The Tokyo market has entered August, but after struggling, the Nikkei average continues to exhibit heavy movements at the upper levels. One of the factors contributing to the Nikkei average's heavy upper levels is that it is below the 5-day Moving Average, which is also suppressing the upper levels of stock prices.

The 5-day Moving Average is the average closing price of the past 5 trading days. However, when the Moving Average is downward and positioned above the stock price, it indicates a short-term downward trend. Therefore, caution is necessary until the stock price recovers above the 5-day Moving Average and the 5-day Moving Average changes to an upward trend.

On the other hand, the 25-day Moving Average continues to trend upwards, indicating that the upward trend is ongoing. Therefore, it seems that whether the downward 5-day Moving Average or the upward 25-day Moving Average breaks will be the focal point of this week.

If it maintains above the 25-day Moving Average, it is expected to stay above the downward 5-day Moving Average, and the possibility of the 5-day Moving Average turning upward also seems to be in sight.

On the other hand, if the 5-day Moving Average continues to act as a resistance and falls below the 25-day Moving Average, a full-fledged downward trend may occur, potentially dropping towards the 75-day Moving Average. Investors holding long positions should be cautious of potential losses and their expansion.

[Chart] Nikkei Stock Average (Daily) Source: Created by Invest Trust Co., Ltd. from i-chart *The periods for the Moving Avarage are set to 5 days (blue line), 25 days (red line), and 75 days (gray line). *Trading volume is in the prime market *The momentum period is set to 10 days (blue line), and the 3-day Moving Avarage of the momentum (red line) is also displayed.

Be cautious of the decline in momentum and breaking below the 0 line

Next, looking at the momentum that tells us the strength of the upward and downward movements, both the momentum and its Moving Avarage, which is the signal, are decreasing, but they remain above the dividing line of 0, which determines the strength of the upward and downward movements.

In this situation, the key point is whether the decline of the two lines continues. This is because the level of the two lines holds the key to whether it will exceed the 5-day Moving Average or fall below the 25-day Moving Average.

If the decline of the two lines continues and falls below the 0 line, the momentum of the rise will change to a momentum of decline, increasing the likelihood of falling below the 25-day Moving Average. On the other hand, if the two lines change to an upward trend and rise, the momentum of the rise will strengthen, bringing the possibility of exceeding the 5-day Moving Average into view, and there is also hope for recovering and maintaining the 41,000 yen level.

In this way, the rise and fall of momentum and signals are believed to hold the key to whether it exceeds the 5-day Moving Average or falls below the 25-day Moving Average.

Given this situation, if both lines fall below the 0 line and also drop below the 25-day Moving Avarage in the future, it will be necessary to pay attention to the emergence of a downward trend. Therefore, investors holding long positions should be cautious of potential losses and their expansion.