Nikkei 225 holds above 39,600 as tech rebound lifts sentiment ahead of U.S. data
Nikkei 225 consolidates near 39,678 with tech rebound and breakout levels in focus
The Nikkei 225 index climbed 0.55% to close at 39,678 on Tuesday, regaining ground lost in the previous session, as Japanese equities were buoyed by a recovery in U.S. tech sentiment and optimism around trade developments. The gains were led by semiconductor and electronics names, with Disco, Advantest, and Tokyo Electron all advancing more than 1.5%. The broader TOPIX Index also posted a modest gain of 0.09% to settle at 2,825.
Highlights
- Nikkei 225 closes at 39,678, up 0.55%, with tech stocks leading the rebound
- RSI and narrowing Bollinger Bands indicate short-term consolidation phase
- Break above 40,200 could target 42,000; support rests at 39,300 and 38,500
Traders reacted positively to news that Nvidia will resume shipments of its H20 chips to China, following a meeting between CEO Jensen Huang and U.S. President Donald Trump in Beijing. The development eased concerns about deeper curbs on tech exports and supported the rebound in chip-related names.
Fast Retailing and Mitsubishi UFJ also contributed to broader index stability. Meanwhile, market participants are closely watching upcoming U.S. inflation and trade data, which could offer fresh cues on the trajectory of global monetary policy and its impact on Japan’s export-heavy sectors.
Consolidation holds near trend highs
Technically, the Nikkei 225 continues to respect the ascending channel structure that has been guiding price since April. Price is currently consolidating near the upper third of the channel, with the 20 EMA on the 4-hour chart offering immediate support at 39,591 and the Bollinger Band base cushioning at 39,450. Despite rejecting from the 41,000 level earlier this month, the index remains structurally bullish, with higher highs and higher lows intact.
Nikkei 225 index forecast (Source: TradingView)
Momentum indicators reflect a cooling phase rather than a reversal. The 4-hour RSI has eased to 54.98 after entering overbought territory last week, suggesting waning upside strength. Bollinger Band narrowing also points to potential rangebound action. A decisive push above 40,200 could resume bullish momentum toward 42,000, while a break below 39,300 would shift focus to the 100 EMA support near 38,500.
In our earlier coverage, we highlighted the significance of the 40,000 handle as a near-term pivot. The current stalling below this level validates that outlook, as the market awaits either a bullish breakout or a deeper pullback. Given the upcoming U.S. macro triggers and sector rotation into tech, the next impulse may provide clarity on the medium-term trend.
