NKD just tagged our two next lower targets and is closing in on the third.  As we discussed back on Sep 10 [see: Sep 10 Update on Nikkei], this latest leg lower is seen as necessary to prommpting a further expansion of QQE and/or debasement of USDJPY.

It’s pretty clear that NKD’s price action has been as heavily manipulated influenced as any index.  But, in this case, another leg lower would make perfect charting sense.  It would also fit in nicely with the idea of compelling the BoJ to further expand QQE.

We expanded the target range to include not only the ,886 retracement of the rise from 16525, but the .618 of 14400 to 20990 and the 1.618 of the bounce from 18450 as well (the Fib numbers have changed a bit with the roll to the next contract month.)

Now, with NKD finally reaching the target range, we have to figure out “where to” from here; and, will it be enough to get the BoJ off the dime?

continued for members…

I don’t see the Boj letting this threat stand.  At this point, NKD is off about 28% from its highs. As we discussed in Japan’s Equity Trap, they simply can’t afford to let the Nikkei decline any further.

Per today’s post:

FWIW, USDJPY appears likely to tag the bottom of its triangle tomorrow or overnight.  Would not be all surprised if it does so overnight in order to allow NKD 17092, then a bounce before the opening tomorrow that traps today’s overeager bears.

If we get a bounce here at 16880-17034 as expected, then we could see NKD back above the channel midline by 17940 and the top of the channel at around 18994 in the next week or two.  Our first fairly definitive goal in weeks!

Should it fail to bounce, prepare for all hell to break loose — at least until the BoJ steps in.  Stay tuned.