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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.

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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."

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