The indices’ larger pullback from the highs is purely technical despite whatever fundamental or reason the news suggests. I will show the technical reasoning. We will look at the Nikkei, FTSE, as well as the Hang Seng indices cycles up from the 2009 and 2008 lows. Each of these indices are shown progressively in the order mentioned on down this page.
Firstly we will look at the Nikkei which should be obvious by looking that it has been in an uptrend. Since the lows in 2009, the rally in Nikkei shows a 5 swing sequence that favors further upside. Nikkei has now reached the area of 23354 – 25422 that is the .618 – .764 Fibonacci extension of the 2009 to 2015 cycle. This is measured from the beginning of the cycle from the 2009 lows on up to the 2015 highs then down to the 2016 lows. Most cases a fifth swing will end in this Fibonacci extension area which it appears to have done.
Thus at the current juncture the Nikkei is expected to continue a pullback in the 6th swing in 3, 7, or 11 swings to correct the cycle up from the 2016 low. The expected correction in this 6th swing is similar in nature to the 2nd swing pullback of 2013 although it likely will end up to be a larger pullback. Afterward of completion of the 6th swing pullback it should see more upside in 7th swing. The black 3 marks the target area for this next swing higher in the bullish sequence.
Nikkei Weekly Swings
Next we will look at the FTSE weekly swings. The first thing to note again is the bullish uptrend since the 2009 lows. Like the Nikkei, the FTSE shows a 5 swing sequence that favors further upside and has reached the area of 7747 – 8290 which is the .618 – .764 Fibonacci extension of the 2009 to 2015 cycle. This is measured from the beginning of the cycle from the 2009 lows on up to the 2015 highs then down to the 2016 lows. In most cases a fifth swing will end in this Fibonacci extension area which it appears to have done.
At this current juncture the FTSE is expected to continue a pullback in the 6th swing in 3, 7, or 11 swings to correct the cycle up from the 2016 low which should be similar to the 2nd swing pullback of 2013. After a completion of the 6th swing pullback it should see more upside in the 7th swing toward equal legs or better of the 2009 to 2015 cycle which begins around the 9175 area.
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