In today’s technical analysis, let’s take a closer look at the Nikkei, which is pushing higher and flashing a proper long-term buy signal. The Japanese index recently escaped from a flag formation to the upside, marking the end of the bearish correction and confirming renewed bullish momentum.
Adding to the strength of this setup, the flag itself ended with a smaller pennant pattern, marked with red lines, which also broke to the upside. This breakout from two consecutive continuation patterns further reinforces the positive sentiment and the outlook for buyers.
Finally, the price managed to climb above the pink horizontal resistance, a level that had previously capped upward moves. Being above both the broken flag and the horizontal resistance gives traders a clear bullish picture, with momentum firmly in favor of the buyers. As long as the Nikkei holds these breakouts, the signal to buy remains intact, and the hope is that other indices will follow this lead, avoiding divergences and aligning with the upward move.