Japan: Ahead Of The Consumption Tax Hike

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Although next month’s consumption tax hike has always been part of the so called “Three Arrows” policy of Japanese Prime Minister Shinzo Abe to get inflation and hence growth back into the economy, it really does mark something of a make or break point for the economy. Indeed, many economists are now suggesting that we can only really judge the success of Abenomics by looking at June’s economic data which will reveal how well or otherwise the storm of this tax hike has been weathered.

In the meantime, we see both the Nikkei 225 and Dollar / Yen continuing what can be described as near term holding patterns.


Nikkei:  Support Towards 200 Day Moving Average

Near term bear trap rebounds from below 200 day moving average at 14,513 since the beginning of February.

Overall rising trend channel from May 2013 with implied 18,000 target over the next 6 – 9 months.

50 day moving average / RSI 50 break are implied technical triggers for buyers.

Only sustained price action back below February’s 13,995 floor even begins to delay upside scenario.

Dollar / Yen: Support Well Above 100 Yen

Multiple support points above 200 day moving average at 100.57

Implied top of October price channel target towards 108.

Buy trigger possibly an end of day close back above the 50 day moving average at 102.46.

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