TOKYO: Japan’s Nikkei share average edged down in choppy trade on Friday morning as technical indicators suggested the market is overbought and vulnerable to a correction.
The Nikkei shed 0.3 percent to 19,892.77 in midmorning trade after opening a tad higher. For the week, the benchmark has barely changed.
Trading is expected to remain subdued throughout the day as many market participants are away for the U.S. Thanksgiving holiday.
“A correction is not surprising at any moment given the overbought market,” said Takuya Takahashi, an analyst at Daiwa Securities, adding that investors are looking to events next week, including whether the European Central Bank would roll out more stimulus.
The ECB meets next Thursday and most in the market expect it to expand its asset purchase programme and lower its deposit rate.
Some technical signs show the Japanese market is overbought, with the toraku ratio, or up-down ratio, standing at 133. A level above 120 signals an overbought market. The ratio is calculated by dividing the 25-day moving average of stocks on the Tokyo Stock Exchange’s first section that gained by the 25-day average of those that fell.
