Where does the Nikkei go From here

Nikkei futures seem to exhibit iterated pattern from rally in May of 2003.  Zooming on market fractal from 10/21/2003 to 2/10/2004 following chart pattern emerged.

Extrapolated Pattern: (Down wave a-b-c then up wave A-B-C-1-2-3-4-5 then retracement back to B before breakout)

Fast Forward to Current Nikkei movement:

We experience the down wave a-b-c Which sent Nikkei from  10770 on 8/31/2009 down to 9005 on 11/30/2009

This has been followed by an up wave A-B-C-1-2-3-4-5 which has sent Nikkei From 9005 up to  10800 (closed today on the SGX Futures).

Nikkei has three times struggled to break resistance only to close below highs.

If iterated fractal is valid Nikkei should sell back to the  10200 level before gaining gusto to break through 10770 barrier taking us to at least the 12,000 level.

Caveat:

Should NIkkei however simply breakout higher, will consider above heuristic flawed and just buy back in to rally. However indications of strength in the Yen point to a correction.

By Andrew Shawn – Recursive Investments in Global Financial Markets

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