Thursday’s ETF Chart To Watch: MAXIS Nikkei 225 Index ETF (NKY)

by on August 9, 2012 | ETFs Mentioned:

Stocks were mixed on the day as bullish pressures cooled off following yesterday’s massive run-up. Momentum from last week’s better-than-expected employment report appears to still be carrying investors’ sentiment since no major data releases are expected to hit the street this week. The willingness of the ECB to step in and buy government bonds has also restored confidence to those worried about the fragile financial health of debt-burdened member nations seeking aid [see also 10 Questions About ETFs You've Been Afraid To Ask].

Investors will turn their attention to Japan tomorrow as the nation’s central bank is slated to announce its interest rate decision. As such, the Precidian MAXIS Nikkei 225 Index ETF (NKY, B+) is on our radar screen because it may gap at the opening bell following the overnight reaction to the latest rate decision and, more importantly, any economic commentary issued by the Bank of Japan [see also 5 Surprising Facts About Hyperinflation].

Chart Analysis

NKY has once again neared its 200-day moving average (yellow line) as the bulls looks to reignite positive momentum over the long term. Notice how NKY previously failed to summit the $13.60 level back on July 3, 2012; from a technical perspective, this will likely happen again as NKY also previously bounced off the same level of support (blue line) right at $12.75 a share before encountering selling pressures right at its 200-day moving average [see 5 Tips ETF Traders Must Know].

Click To Enlarge

Although this ETF is trading near the bottom-half of its longer-term range, conservative investors should hold off from jumping in long until the price establishes definitive support over $13.50 a share for five or more consecutive trading sessions depending on individual risk tolerance [see also ETF Technical Trading FAQ].


Positive commentary from the Bank of Japan may be the much-needed fundamental boost that could carry NKY over its 200-day moving average. In terms of upside, this ETF will need to establish support above $13.60 a share before moving on to conquer the next resistance level above the $13.75 mark. On the other hand, if history repeats itself from a technical perspective, NKY will be in for a tough trading session; in terms of downside, this ETF has support at $13.20 a share followed by the $12.80 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.