Healthy Uptrend Faces Test: Nikkei’s Wedge Setup Explained

This correction has taken the form of a wedge pattern, marked with red lines. At the same time, the market is testing a crucial orange horizontal support — the former top from July 24th. Buyers will want to see this support defended, as it forms the foundation of the current bullish outlook.

The base scenario remains positive. As long as the orange support and the lower wedge boundary hold, sentiment stays constructive. A breakout above the upper red line of the wedge would confirm renewed bullish momentum and deliver a proper long-term buy signal. For now, the focus is on whether the buyers can maintain control of these supports.