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The above chart reflects that the Nikkei index hit dual channel resistance at the beginning of this year. It appears to be heavy resistance because the Nikkei’s rally stopped at dual resistance and so far in 2014, its down 13%.
The decline after hitting resistance, looks to be causing a break of support. Should markets around the world really care about what the Nikkei does?
The Power of the Pattern suggests yes! In early 2007, the Nikkei broke support at (1), as it was hitting channel resistance and declined. Soon after the Nikkei broke support, index’s around the world soon followed.
In my humble opinion, the Nikkei remains a global leader in both bull and bear markets and the action of late in this index should be respected and watched closely!