Nikkei 225 index pulls back as 41,000 resistance halts upside momentum
Nikkei 225 stalls near historical resistance after rally, traders eye support near 39,300
The Nikkei 225 index started the new quarter with a modest pullback, trading near 39,986 after briefly testing the psychological 41,000 level. The dip marks a cautious pause in what had been a strong May–June rally, as price encounters a historically significant resistance zone that has capped gains in multiple past cycles.
Highlights
- Nikkei 225 trades near 39,986 after rejection from 41,000 psychological resistance
- Price retests major resistance zone between 39,900 and 40,300 as momentum cools
- Indicators show bearish divergence, while Supertrend and SAR still favor bulls above 39,600
Despite the recent bullish structure, early-July price action suggests short-term exhaustion may be setting in.
Resistance retest sparks short-term reversal
The 4-hour chart reflects a clean breakout from consolidation above 39,000, supported by rising demand from the 37,800–38,000 region. However, the advance met firm resistance just above 40,800, with the latest candle showing a pronounced rejection wick. This places the index back within a congestion zone between 39,900 and 40,300—an area that triggered multiple reversals during rallies in 2023 and early 2024.
Nikkei 225 index forecast (Source: TradingView)
Bollinger Bands have begun to revert from the upper band, while mean reversion points to the 39,300–39,500 area. Price remains above positively aligned 50- and 100-period EMAs, but the 200 EMA sits deeper at 37,676, offering medium-term structural support if the decline extends.
Momentum fades as consolidation zone holds firm
The RSI on lower timeframes has dropped below 40, signaling short-term bearish divergence after the 41,000 high. MACD histograms have flipped red, and signal lines have begun to cross down, reinforcing the likelihood of a consolidation or retest phase. While the Supertrend and Parabolic SAR still favor bulls, a shift below 39,600 could confirm short-term downside pressure. For buyers to resume control, a decisive breakout above 40,500 is needed to clear the broader resistance cluster and sustain bullish momentum.
In prior analysis, the Nikkei 225 was noted for reclaiming key breakout levels above 39,000 while maintaining strong EMA alignment. With that structure still intact, this pullback may simply represent a pause within an ongoing uptrend—unless selling intensifies below the 39,000 support base.
