Japanese Prime Minister Shinzo Abe famously launched his three arrows in the fall of 2015. They seemed to achieve nothing for Japan's economy, apparently fluttering to earth, and the media lost interest.
The performance of the Nikkei 225, however, suggests that at least some of the arrows, aggressive monetary easing, fiscal stimulus and structural reforms, reached their targets.
Although there is a focus on the 21,000 level it is the 20,800 level that is much more important technically.
The move above that level breaks a long-term multi-year triple-top pattern. That level acted as support in 1990. The level acted as a resistance level in 1994, 1997, 2000 and again in 2015. It is a very powerful resistance level and that makes the breakout particularly significant because it signals a substantial change in economic outlook.
The Nikkei did move above that level for a few weeks in 1996 to peak near 22,000. A current move above 22,000 will act as further confirmation of the strength of this breakout and its significance.
Between 1987 and 1991 the Nikkei created a very large head-and-shoulder pattern. What is important today about this pattern is the equal highs made by each of the shoulders. This creates a historical resistance level near 26,500.
This is the next longer-term resistance target for the current Nikkei breakout.
Rather than see any pullback as a buying opportunity, they see the pullback as a warning the market will collapse.
The Guppy Multiple Moving Average (GMMA) indicator analysis confirms the strength of the trend. The long-term group of averages is well separated. This shows investors are very confident about the strength and continuity of the trend. There is short-term trading activity.
This is shown by the short-term group of averages. The compression and expansion activity shows traders taking short-term profits. They are not quite as confident as investors.
The key feature is the way the pullback in April and September used the lower edge of the long-term GMMA as a support level for the subsequent rebound rally.
That behavior suggests that any pullback is a buying opportunity.
The index is clustering near the upper edge of the short-term GMMA. This is very bullish so traders will watch for consolidation to develop.
Typically this has been a sideways movement, followed by a retreat and rapid rebound. Any move toward 21,000 will represent a buying opportunity as the rebound develops.
Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found at www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.