Nikkei 225 Forecast: Bullish acceleration above 53,370 key support

[Ben Graham]

Key takeaways

Nikkei 225 is leading global equity performance in early 2026, rising 7.9% YTD and outperforming major US indices, supported by improving domestic macro conditions and resilience despite concerns over rising JGB yields.

Fundamentals remain a key tailwind, with Japan’s Citigroup Earnings Revision Index hitting a one-year high, signaling improving corporate earnings expectations versus the US and Europe, alongside potential political support from a snap election that could reinforce pro-stimulus policies.

Short-term technicals favour further upside, with bullish acceleration intact above the 53,370 key support; holding this level opens the door to resistance targets in the 54,565–55,623 range, while a break below would signal a near-term corrective pullback.

In our 2026 long-term global stock market outlook, published on December 26, 2025, we selected the Japanese stock market to outperform due to its improving macroeconomic factors and positive technical indicators.

Read more: 2026 Stock Indices Outlook: Dow Jones, Nikkei 225, Hang Seng poised to outperform

In this report, we will shift our focus to a shorter-term trading horizon, focusing on a one- to three-day period to project the likely trajectory of the Nikkei 225.

The narrative so far… Bullish, going against the fears of rising JGB yields

zoom_out_map

Fig. 1: Year-to-date global stock market indices as of 14 Jan 2026 (Source: MacroMicro)

The Nikkei 225 has continued to trade in a bullish trend since the start of the new year. The Japanese benchmark stock index rallied by 7.9% in local currency terms (ranked 2nd, see Fig. 1), just behind the 2025 red-hot, South Korea’s KOSPI that continues to extend its gains into 2026 with a positive return of 12.1% (see Fig. 1).

The Nikkei 225 has also outperformed the US stock market: small-cap Russell 2000 (6.8%), Dow Jones Industrial Average (2.3%), S&P 500 (+1.1%), and Nasdaq 100 (0.9%).

On top of the potential near-term positive feedback loop out from the internal political factor, where there is now growing chatter in the marketplace that Japanese Prime Minister Takaichi is likely to dissolve the lower house in parliament as soon as January 23 and call for a snap election soon, either on February 8 or February 15.

A snap election would likely aim to capitalize on high approval ratings of about 70% for Takaichi and could strengthen the Liberal Democratic Party’s grip on power in the more powerful lower house in Japan’s parliament. Hence, if successful as it is intended, Takaichi can have a firmer mandate to pursue pro-stimulus policies that are likely to boost economic growth prospects in Japan.

It’s all about earnings growth prospects

zoom_out_map

Fig. 2: Citigroup Earnings Revision Index (Japan, US, Europe, UK) as of 2 Jan 2026 (Source: MacroMicro)

Japan Inc’s earnings growth prospects have continued to lead the pack. Citigroup Earnings Revision Index for Japan has continued to trend upwards in the first week of 2026, where it rose to 0.43, a new one-year high as of 2 January 2026, surpassing the US (-0.08), Europe (-0.09), and the UK (-0.14) (see Fig. 2).

The Citi Earnings Revision Index is calculated as “Proportion of Companies with EPS Upgrades (%)” − “Proportion of Companies with EPS Downgrades (%)” (compared to last week). When the index is above the zero axis, it means that analysts on average, are optimistic about the outlook for corporate earnings, and vice versa, it means that analysts are relatively pessimistic.

Let us now focus on the short-term technicals on the Japan 225 CFD index (a proxy of the Nikkei 225 futures).

53,370 key short-term support to maintain bullish acceleration

zoom_out_map

Fig. 3: Japan 225 CFD index minor trend as of 15 Jan 2026 (Source: TradingView)

Since the 8 January 2026 low of 51,055, the price actions of the Japan 225 CFD index have transitioned into a potential acceleration phase within its latest minor uptrend phase that kickstarted on 18 December 2025.

Watch the 53,370 key short-term support to maintain the current near-term bullish state for the next intermediate resistances to come in at 54,565, 54,910/55,050, and 55,530/55,623 (Fibonacci extension clusters) next (see Fig. 3).

In addition, the hourly RSI momentum indicator has continued to hold above a parallel ascending support that suggests potentially short-term bullish momentum remains intact for the Japan CFD index.

On the flip side, failure to hold at 53,370 with an hourly close below it is likely to invalidate the bullish acceleration scenario to open up scope for a minor corrective decline sequence to expose the next intermediate supports at 52,830/53,644 and 52,060.

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2026 OANDA Business Information & Services Inc.