Nikkei 225 Index Rises Above 40,000 Points

As the chart shows, the Nikkei 225 stock index (Japan 225 on FXOpen) has risen above the psychological level of 40,000 points — for the first time in five months.

Bullish drivers include:

→ Reduced geopolitical risks. A ceasefire between Iran and Israel has boosted market sentiment, with stock indices rising both on Wall Street (yesterday the Nasdaq 100 hit a new all-time high) and in Japan.
→ Easing fears of a prolonged trade war. White House Press Secretary Karoline Leavitt noted that the timeline for implementing tariffs is flexible and could be extended.
→ Economic news. Recent data shows that inflation in Japan has slowed for the first time in four months: the core consumer price index fell to 3.1% from 3.6% in May.

Technical Analysis of the Nikkei 225 Chart

Price movements are forming an upward channel (highlighted in blue), but the market appears vulnerable to a pullback, as suggested by:
→ proximity to the upper boundary of the channel;
→ overbought conditions indicated by the RSI.

If a pullback develops, it will provide yet another example of how the price failed to hold above the psychological level of 40,000 — something we’ve seen repeatedly since October 2024, and we’ve been pointing out this pattern for quite some time.

Therefore, we might witness another false breakout above the 40K level on the Nikkei 225 (Japan 225 on FXOpen), followed by a retreat deeper into the blue channel — potentially towards its median line.