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Nikkei: Corrective pullbacks expected

FXStreet (Córdoba) - The Nikkei 225 edged higher on Monday, up by 122 points to 18.947.12, trading however, below the high posted last Friday in after-hours trading.

Sentiment however, was quite positive in Asia, following the latest Chinese Central Bank decision to cut rates last Friday. Additionally, the index got a boost from stronger profits expectations in the electronic sector, particularly focused in worldwide firms such as Hitachi and Panasonic.

Nikkei technical view

“Holding below the 19,000 level ahead of Tuesday opening, the daily chart shows that the index remains well above a bullish 20 SMA, but that the technical indicators have lost their upward strength and aim to correct lower from near overbought territory”, said Valeria Bednarik, chief analyst at FXStreet. “In the 4 hours chart, the index is well above its moving averages, with the 20 SMA providing a strong dynamic support around 18,792 in the case of a bearish movement, but the technical indicators are also pulling back from overbought levels, in line with a downward movement at the beginning of the day”.

Support levels: 18,890 18,835 18,792. Resistance levels: 18,972 19,059 19,157.

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