Nikkei 225 cools to 50,843 as traders lock profits in tech after record current account boost

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Nikkei 225 cools to 50,843

Highlights

- Nikkei 225 dips to 50,843 after profit-taking in AI and chip stocks.

- Index still trades above key EMAs with 20-day support near 49,800.

- Japan’s record JPY 4.5 trillion current account surplus boosts sentiment.

The timing is crucial, with the benchmark now testing the lower boundary of its accelerated ascending channel — a zone that often decides whether an uptrend continues or pauses for consolidation.

Profit-taking hits AI and chip names

On the charts, the Nikkei 225 index remains comfortably above all major moving averages. The 20-day EMA at 49,798 acts as the nearest support, followed by the 50-day EMA at 47,375, which has repeatedly absorbed prior corrections. As long as price stays above these levels, the trend structure remains bullish with higher lows intact.

Nikkei 225 index price dynamics (Source: TradingView)

The long-term yellow trendline from April continues to guide the uptrend, while a sharper blue channel introduced in September highlights the acceleration phase of the rally. The current pullback marks the first meaningful retest of that channel’s lower edge since late summer, making it an important technical checkpoint for traders.

RSI cooled to 60, reflecting easing momentum after weeks in overbought territory. AI-linked stocks led the decline, with Fujikura, Advantest, Kioxia, and Disco Corp dropping between 0.9% and 6%. The moves show rotation away from high-valuation growth sectors rather than a wholesale exit from equities.

Rotation to defensives keeps structure intact

Despite the weakness in tech, select large caps displayed resilience. Sony gained 5.5% after raising its profit outlook, while Honda edged 0.8% higher even as it trimmed full-year guidance amid tariff uncertainty and Chinese EV competition. The rotation into companies with stable earnings underscores investors’ preference for balance sheet strength over speculative momentum.

Japan’s macro backdrop remains supportive. The nation posted a record JPY 4.5 trillion current account surplus in September, driven by strong exports and a weak yen. This combination continues to attract foreign institutional inflows, a key driver of the Nikkei’s advance in 2025. Global investors seeking yield have favored Japanese equities, reinforcing long-term demand.

Bulls still hold the trendline

Technically, the index remains in a bullish phase unless the lower channel boundary breaks decisively. The first key support lies at 49,800, followed by the major floor near 47,400. Resistance appears at 52,200 and 53,500, the upper bounds of the channel. A rebound from 49,800 could reignite momentum toward new highs, while a close below it may trigger a deeper test of 47,400, where long-term buyers have previously stepped in.

For now, the pullback looks like healthy consolidation after a near-vertical climb. As long as buyers defend the 20-day EMA, the Nikkei remains positioned for another leg higher — with potential to revisit record territory before year-end.

In prior analysis, the Nikkei’s strength was linked to AI enthusiasm and robust foreign inflows. The current movement fits that narrative — not a reversal, but a rotation-driven pause inside a dominant uptrend. The structure remains firm as long as support zones hold, reinforcing Japan’s position as one of the best-performing equity markets of 2025.

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