Nikkei hits fresh 3-1/2 month low

Japan’s benchmark index Nikkei fell to 19,383.7 this Monday morning in Asia; its lowest level since May 2 on caution ahead of war drills in the Korean Peninsula. 

At the time of writing, the index was trading 0.33% or 63 points lower on the day around 19,408 levels. So far, the bulls have not taken heart from the bearish exhaustion indicated by Friday’s Doji candle. 

The USD/JPY pair hit a 4-month low of 108.60 on Friday and that seems to be weighing over the Japanese stocks. A strong Yen is bad news for the Japanese exporters. 

Elsewhere, South Korea’s Kospi index fell 0.1%. Australia’s S&P/ASX 200 Index dropped as well. The MSCI Asia Pacific Index slipped 0.2%. 

Nikkei Technicals

The index shows a rounding top formation. On the downside, the key levels to watch out for are - 19,256 [200-DMA] and 19,144 [May 1 low]. On the higher side, resistance is seen at 19,433 [previous day’s low] and 19,509 [session high].