The recent minor corrective decline of -3.4% seen on the Japan 225 CFD Index (a proxy of the Nikkei 225 futures) from its 30 June 2025 intraday high of 40,852 to 2 July 2025 intraday low of 39,527 has stalled at an intermediate key support inflection area.
Firstly, the lower boundary of a minor ascending channel has been in play since the last Monday, 23 June low. Secondly, the 50% Fibonacci retracement of the prior steep bullish breakout rally from 23 June 2025 low to 30 June 2025 high. Thirdly, the minor corrective decline of -3.4% may mark the end of a minor corrective wave 4 sequence, and the next possible move on the Japan 225 CFD Index may see the start of a minor bullish impulsive wave 5 sequence based on the Elliot Wave Principle (see Fig 2).
In addition, the hourly RSI momentum indicator has traced out a bullish divergence condition yesterday at its oversold region and staged a bullish breakout above a parallel descending resistance. These observations suggest yesterday’s downside momentum has eased.
Watch the 39,390 key short-term pivotal support for the next intermediate resistances to come in at 40,4040, 40,335, and 40,850/41,050 in the first step.
On the flip side, a break below 39,390 negates the bullish tone for an extension of the minor corrective decline to expose the next immediate supports at 39,145 and 38,850 (pull-back of the former range resistance from 13 May 2025 and close to the 20-day moving average).
