Nikkei 's Secular Downtrend May End: Charts

Japan’s benchmark Nikkei 225 Index could break out of the downtrend it has been in for more than 20 years if it bottoms out and starts recovering from a new low not quite as sharp as previous depths, Robin Griffiths, technical strategist at Cazenove Capital told CNBC.

Japanese stocks fell sharply after the huge earthquake and tsunami that struck Japan last Friday.

“We had been in a cyclical bull phase coming up from about 7,000 (points),” Griffiths said.

“The index has been in a secular downtrend since 1989, falling from 38,000 odd (points), and prior to this disaster it was not clear that that secular downtrend had ended. Within the secular trend there have been plenty of cyclical bull and bear phases,” he said.

“If when the index goes down now, (and) it does not go back to the old low, then you’ve got a higher low and we’d be starting to say: actually, at long last the secular trend has ended,” Griffiths said.

The rebuilding effort would then provide new impetus, and investors would be asking themselves when this would start, he said.

Major listed companies would take a hit first however as their exports had been halted due to the disaster, and it would however take some time before a new bull run was in place.