This market isn’t done rallying yet: Technician

Japanese stocks are starting the month off strong.

On Monday, the Nikkei rose 2 percent, closing near a one-month high, after the Bank of Japan's decision to take interest rates into negative territory. And according to one technician, Japanese stocks aren't done with their rally just yet.

Craig Johnson of Piper Jaffray said that EWJ, the ETF that tracks Japanese stocks, is set up for a relief rally that will take the ETF as much as 8 percent higher.

"You'll see that the EWJ has gotten pretty oversold and is starting to bounce, money flow is starting to improve back into EWJ," Johnson said Friday in a "Trading Nation" segment.

Read MoreAn industrial recession may be engulfing America

Stacey Gilbert of Susquehanna said while investors seem to be betting on more upside for Japanese stocks, they're favoring currency-hedged ETFs to account for weakness in the yen.

These ETFs include DXJ, HEWJ and DBJP, all of which have outperformed EWJ in the last week. Both HEWJ and DBJP have risen 6 percent in one week.

"If you look at the actual ETF side, this is where you see the most interesting activity with buyers of the currency-hedged ETF. This is different from what we've seen most of this year," Gilbert said Friday on "Trading Nation."

Want to be a part of the Trading Nation? If you'd like to call into our live Wednesday show, email your name, number and a question to

Latest Special Reports

  • A logo sits on a sign at the World Economic Forum in Davos, Switzerland, on Thursday, Jan. 23, 2014.

    Coverage of the World Economic Forum’s annual meeting in Davos, Switzerland.

  • Take an in-depth look at the world of modern medicine - examining the treatments, companies and people making a difference in the way we treat illness and injuries today, and laying the foundation for the medical treatments of tomorrow.

  • Fintech

    From Apple Pay to roboadvisors, the worlds of finance and technology are changing the way we live, work, spend money, and do business.

About Trading Nation

  • Trading Nation will offer enthusiast traders insights from a group of "Trader Coaches," a collection of expert CNBC Contributors who are well-versed in the daily challenges of trading. Each "Trader Coach" will have a different area of expertise, and will share their unique perspective on the markets, allowing new insights to emerge from this collaboration. Trading Nation is not simply about finding that next trade; it's a forum where enthusiast traders can hear and compare investing ideas in order to build confidence in their trading decisions.

On-Air Video



"Power Lunch" Co-Anchor