Nikkei futures chart the potential "down first, then up" trend

13 Ogo

1. The index is currently in a downtrend. The latest price is 36,232.44, which represents a significant drop of about 7.34% from the recent peak. In the short term, it may continue to test support levels.
   
2. Potential Support Levels:
   
3. The chart marks several important Fibonacci retracement levels. The 0.5 retracement level at around 36,864.78 could serve as a crucial support. If this level breaks, the next support might be around 30,867.58 (0 retracement level).
   
4. Rebound Momentum:
   
5. Seasonal data shows that September and October are typically positive months, with average gains of 1.05% and 1.92% respectively. This could provide upward momentum for the index.
   
6. Long-term Upside Target:
   
7. The chart projects a long-term upside target at 50,208.18 (1.618 Fibonacci extension level). This suggests a bullish long-term outlook.
   
8. Possible "Down First, Then Up" Path:
   
9. Based on this analysis, the index might continue to decline to the support level around 36,864.78, or potentially lower. Subsequently, it could start rebounding due to seasonal factors and technical support, gradually breaking through previous highs and ultimately climbing towards the long-term target of 50,208.18.
   
10. Risk Factors:
    
11. It's important to note that if the index breaks below the critical support at 30,867.58, it could invalidate this "down first, then up" expectation and potentially trigger a deeper correction.
    
13. In conclusion, the Nikkei 225 index is currently in a correction phase, but technical and seasonal factors suggest a possibility of declining first before rising. Traders should watch key support levels and wait for reversal signals before considering entry. Risk management is crucial, and close attention should be paid to market changes.