NIKKEI 225 TARGETING MA20 ON PROFIT-TAKING IN CYCLICAL SHARES
Nikkei 225 futures are currently trading at 22075-lower by 2.19% as compared to the previous closing. The contract has been closing in negative territory since the last two trading sessions.
In the cash markets, the Nikkei 225 fell 2.39% to close at 22,036.05 points on Tuesday. The index fell today as traders took profits on cyclical stocks that rallied on Monday, while falling U.S. bond yields pressured financial companies. The benchmark rose to a two-week high on Monday after the U.S. and China withheld the imposition of new tariffs in a temporary arrangement reached over the weekend in the G-20 summit.
The broader Topix lost 2.36% to close at 1,649.20 on Tuesday.
Banks and insurers, which invest in higher-yielding products such as foreign bonds, fell after the U.S. benchmark 10-year yield slipped to 2.966%, the lowest since 13th September. Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group fell more than 2% on Tuesday.
Companies with high exposure to China that rallied on Monday lost ground on profit-taking. Factory automation equipment maker Yaskawa Electric fell 3.4% and construction equipment maker Hitachi Construction Machinery dropped 3.9% on Tuesday.
Index-member Pigeon Corp dropped more than 4% after the firm’s decision to keep its full-year outlook unchanged disappointed investors, although its net profit for the Feb.-Oct. period rose 17% on the year to 12.2 billion yen.
Other top losers in the index include- Kawasaki (fell 10%), Sumco Corp. (declined 5%) and ToTo ltd. (fell 6.5%) on Tuesday.
On the technical front, the RSI is currently at 50.72% and suggests that the market can move in the downward direction. The current price is below the MA5. The current price is above the middle line of the Bollinger Bands but is heading downwards. The current price is above the MA20.
Overall Bias is Negative and Short-term trades can be initiated with tight Stop Loss and Take Profit targets.
Trade Suggestion-Limit Sell At 22110, Take Profit At 21960 Stop Loss At 22190