I guess this is where I get confused. In this example, there is a period where the Nikkei and the gold spot in yen seemed to be tightly correlated (2004-2008) but not elsewhere (and indeed in other time periods there is an inverse correlation). This is highlighted (and so presumably the person carrying out the analysis thought it was significant) but there's no indication whether this is coincidental or part of the underlying thesis.
the person carrying out the analysis was me,
here
In terms of the red line, the clear implication is that the Nikkei is trending towards zero.
well yes, but unless they disappear into an insolvency debt deflation black hole, that's clearly not going to happen without a massive Printing Gunfight at Deflation Coral, is it?
a more likely extreme outcome than that, is first a deflation panic, further renewed printing and a surge into Yen 200 Hyperinflation territory.
or Abenomics could work, and the Nikkei could just rally steadily and gently and the world will all be happy ever after. fingers crossed.
To me it doesn't seem like a straight line is the best fit to the peaks, more like a curve which should now be at 18,000 or thereabouts. I suppose for me the key would be whether the line has predictive power.
some people use Fib curves too, analysis is very much a matter of preference and experience, ie how many times you've seen it play out before gives you a feel for where you like your lines.
The clear implication from this is that the market should retreat to under 7,000 in the next few months (unless the bull market is more like 93/94 and 06-07-08 where there are two distinct rise phases in which case the drop is maybe 18 months away).
only if you believe Japan is doomed? if Abenomics is the turning point, then the the bottom is now in and this time
is different? without utter destruction the odds are very good it will eventually turn
somewhere?
Look, as long as you're making pots of money using these techniques then clearly they work. I won't be using them mostly because I'm passive so maybe I just shouldn't worry about it
lulz, no, this is just standard tech analysis being explained as I understand it, and with a little SM manipulation principles thrown in occasionally wherever I can add to the more usual tech stuff with more specific trading principles (theories to be precise)
you'll notice I'm non-commital as to the eventual direction, because as I told you I'm trading manipulation at hourly or 15min levels in general, and I might get 10 or 12 separate shorts in the course of one monthly red downbar here.
and as I've clearly proved with gold that I don't know the next intermediate trend, so I'm staying off big predictions now, but just trying to showing the big picture as seen by trader world in general.
and yes maybe you should just not worry about it.
but the fact is that the Nikkei has been in a very long bear market, and it needs to clear that red line convincingly and break out north to reverse that, and the first attempt was a definite fail thus far.
statistically after a large pin at the top (or bottom) its quite rare to then see price go higher, (or lower) more usually, long pins (at the end of a decent run in either direction) are an intermediate turning point on whatever timescale you're looking at from monthly down to 15 minutes.
) resistance lies, as so far we have only run massive stop-gathering pins through it, and closed back below again.