Nikkei 225 holds near 39,775 as market eyes breakout above resistance

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Nikkei 225 consolidates below resistance amid election aftermath

Highlights

- Nikkei 225 ends just below 39,775 after failing to break 40,200 resistance

- Prime Minister Ishiba’s post-election stability helps prevent deeper pullback

- Top gainers include Mitsubishi Heavy, SoftBank, while Metaplanet drops over 14%

Despite the loss, markets appeared unshaken, supported by the confirmation that Prime Minister Shigeru Ishiba would continue in office, helping maintain policy continuity. Ishiba’s commitment to lead ongoing tariff negotiations with the United States helped calm investor nerves and avoid a broader equity retreat.

Nikkei 225 index price forecast (Source: TradingView)

While political stability provided a cushion, the Nikkei’s attempt to push past the 40,200 resistance zone failed, triggering a modest consolidation phase. The index remains within a rising parallel channel, which has guided price action since mid-April. The current structure supports a continuation of the uptrend, provided key levels hold.

Technical bias remains bullish despite near-term rejection

Technically, the Nikkei continues to ride a bullish channel, with the 20-EMA at 39,496, offering immediate support. Below this, a key support cluster exists between 38,700 and 39,500, defined by the 50 and 100-EMAs. The upper boundary of the current channel, extending toward 42,500, remains the next objective if the index breaks above 40,200 on a closing basis.

The recent pullback appears shallow, and with no major breakdown of structure, market internals continue to favor the bulls. Tuesday’s market breadth was mixed, with notable gainers including Mitsubishi Heavy Industries, up 6.2 percent, SoftBank Group rising 2.9 percent, and Fujikura climbing 4.4 percent. On the downside, Lasertec fell 2.7 percent, Tokyo Electron declined 1.3 percent, and Metaplanet saw a sharp 14.1 percent drop.

What’s next for the Nikkei 225

The Nikkei 225 remains structurally bullish as long as the channel support holds. A close above 40,200 could signal continuation toward 42,500, while a break below 38,700 would weaken the trend structure. With political leadership settled and earnings season in focus, traders will be watching for confirmation signals around key technical levels in the coming sessions.

In earlier coverage, we highlighted the 38,700 to 39,500 zone as critical support. The index continues to respect this region, reinforcing its role as the line of defense for bulls as the broader uptrend matures.

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