In today’s technical analysis, we take a close look at the Japanese Nikkei, which is now one step away from activating a major long-term buy signal. The broader picture remains bullish: the index has been in a steady long-term uptrend, and the recent weakness seen since the beginning of November fits the definition of a classic corrective move rather than a trend reversal. That correction formed a falling wedge, outlined with blue lines, and last week the price successfully broke out to the upside, which is typically a powerful continuation signal.
Following the breakout, this week brought a clean retest of the previously broken wedge boundary—a healthy technical development that often precedes the next impulsive wave. Buyers stepped in exactly where they should, suggesting that demand remains strong and that market participants are protecting the longer-term bullish structure.
Adding to this positive narrative, the chart also shows an inverse head and shoulders pattern, marked with red rectangles. While not the most textbook-perfect version, the structural logic holds: we have a left shoulder, a head, and a right shoulder, all leaning against a black neckline. The only missing element is a confirmed breakout. Price closing above that neckline would unlock the full buy signal, aligning both the continuation pattern (wedge breakout) and the reversal pattern (inverse H&S) into the same bullish conclusion.
Overall, the Nikkei is very close to a technical confirmation of further upside, and all eyes should now be on the neckline breakout.