A steepening of the JGB yield curves (30-year minus 2-year and 10-year minus 2-year) coupled with supportive fundamentals, as highlighted earlier, is likely to create another tailwind for the Nikkei 225.
The major bullish breakout (steepening conditions) of the JGB yield curves since June 2022 has a direct correlation with the movements of the Nikkei 225, and the major uptrend phases of the JGB yield curves remain intact so far, in turn, may trigger a positive feedback loop into the Nikkei 225 (see Fig 4)
In addition, the daily time frame technical chart of the Japan 225 CFD Index has staged a bullish breakout from a bullish continuation flag configuration on Thursday, 17 July, after a retest on its rising 20-day moving average on Monday, 14 July (see Fig 5).
These observations suggest that a medium-term uptrend phase is evolving in the Japan 225 CFD Index. Watch the 39,190/38,730 key medium-term pivotal support zone for the start of a potential fresh impulsive up move sequence for the next medium-term resistances to come in at 40,620 and 42,500/890 (current all-time high and Fibonacci extension).
However, failure to hold at 38,739 invalidates the bullish scenario to kickstart a medium-term corrective decline sequence to expose the next medium-term support at 36,610.