Save for a few hiccups, the Nikkei's year-to-date performance has been stellar. Boosted by Abenomics – a series of policy measures aimed at reenergizing the Japanese economy – the Nikkei has risen over 50 percent year to date, ranking it among the world's best performing indexes in 2013.
With the year drawing to a close the question remains: will the index carry this momentum into the New Year? If chart patterns are anything to go by, the answer appears to be yes.
(Read more: Nikkei surges to six-year closing high)
Chart patterns are powerful trading tools because they point the way to high probability outcomes. Many chart patterns also allow for the calculation of price targets, although not the time frame for the achievement such targets. Thus, chart patterns provide a probability framework that allows traders and investors to take positions in anticipation of price movement.
The weekly Nikkei chart shows a well-developed upward sloping triangle. The triangle pattern has three essential elements. The first two are the resistance level near 14,800 and the up-sloping trend line that intersects that resistance level.