The Nikkei 225 dropped quickly when the first announcement of Donald Trump's victory was in Asian trading on Nov. 9, following the U.S. election and set the tone for other world markets. The dip briefly retested the support level near 16,200 and then rallied quickly.
But the Nikkei has since resumed its breakout uptrend, highlighting two powerful breakout patterns.
The first pattern is the double bottom pattern. This is created by the low near 14,865 in 2016 February and again in June. This chart pattern is used to set a projected upside target near 20,347.
The double bottom pattern is also sometimes called a W pattern. The distance between the base of the pattern at 14,865 and the peak of the pattern near 17,613 is measured. This value is then projected upwards above the W peak to give the long term upside target. This target is near 20,347.
The breakout develops in two stages. The first target is a rebound from support near 14,865 to a peak of the W pattern near 17,613. This level was achieved and as expected there was some consolidation around this. The current breakout is moving towards the long term target near 20,347. The next minor consolidation band resistance level is near 19,000.