NI225 (Japan 225 Index) – Elliott Wave Update | May 20, 2025The long-term structure of the Nikkei 225 appears to be unfolding in a textbook 5-wave impulsive pattern within a rising channel, consistent with Elliott Wave Theory.
🌀 Wave Structure Breakdown:
🔹 Wave (1): The initial impulsive move from the 2020 COVID lows, marking a clear shift in trend and sentiment.
🔹 Wave (2): A corrective retracement that respected channel support, forming a likely Zigzag or Flat correction, setting the base for Wave (3).
🔹 Wave (3): An extended, powerful rally that reflects strong investor confidence and fundamental recovery. This wave has the steepest angle and highest momentum, as expected.
🔹 Wave (4): A complex corrective phase, likely a running Flat or Triangle, which has held above key structural support at 30,611.57. The lower bound of the channel remained intact.
🔹 Wave (5): Currently in early development. Based on Fibonacci extensions:
1.382 target lies at 46,814.91
1.618 target at 49,563.74
Full extension (Wave 5 = Wave 1) points toward a potential top near 54,013.12
These targets align closely with the upper trendline of the rising channel, suggesting a confluence zone for a possible long-term top.
🔍 Technical Confluence:
The EMA ribbon continues to act as dynamic support and resistance.
Price has bounced strongly from the (4) low, confirming bullish momentum resumption.
42,365.53 may act as a key pivot before continuation toward the 1.382–1.618 extension cluster.
📈 Outlook:
As long as the structure remains within the defined channel and above 30,611.57, the bullish scenario toward 46–49k remains intact. Caution near the projected Fibonacci extensions is warranted for potential exhaustion of Wave (5).
💬 Let me know your thoughts — are we headed toward a generational top in the Nikkei, or will macro headwinds cap the upside?
