The Nikkei 225 breached the 60,000 yen mark last week, yet the rally feels hollow to many market participants. With a jam-packed week of corporate earnings, U.S. economic data, and the looming Golden Week holiday in Japan, traders are bracing for choppy and directionless trading.
According to technical analyst Masayuki Toshida of Rakuten Securities, the index's climb was driven largely by a handful of heavyweight stocks—notably SoftBank Group and Advantest—while the broader market showed mixed momentum. The 25-day moving average deviation for the Nikkei remains elevated, suggesting the market is overextended in the short term.
This week, all eyes will be on earnings from Advantest and other major firms, as well as U.S. tech results. The combination of domestic holidays and overseas events makes for an uncertain outlook. Toshida advises caution, noting that the TOPIX's MACD indicator is flashing a potential reversal signal.
Key technical levels to watch: Support at 59,500 and resistance at 60,500 for the Nikkei. A break below 59,000 could trigger a deeper correction.