The Calm Before the Storm? Decoding the Nikkei 225 'Symmetrical Triangle' and the 3 Major Events of December Podcast

Now that we have entered December, many of you may feel that the movement of the Nikkei 225 stock average has been quiet.

Analyzing the chart, the current market is wrapped in a unique sense of tension, as if a giant creature is holding its breath in preparation for its next jump.

In this episode, I will explain the signs currently shown by the chart and the 'three important events' that the market is watching with bated breath.

The True Nature of the Current Market: Symmetrical Triangle

Please take a look at the attached 3-month chart.

The 'upper resistance line' connecting the highs of November and December and the 'lower support line' connecting the lows of October and November are about to intersect sharply on the right side.

This is a classic pattern known as a 'Symmetrical Triangle'.

It is a state where the buying force wanting to go up and the selling force wanting to go down are in equilibrium, and the spring is compressed to its limit. When this balance is broken, the stock price has the potential to be released (break out) significantly in either direction.

Why is the market in a wait-and-see mode right now?

The reason investors cannot move is clear. They want to assess the results of the following three events scheduled for December.

* Tankan Survey (scheduled for release on December 13)

This is a 'health check' for companies.

Following the recent negative GDP growth, attention is focused on how the actual business sentiment of companies is faring. In particular, the figures for non-manufacturing industries such as retail and e-commerce, which are heading into the year-end shopping season, will be the key to measuring the strength of personal consumption.

* Bank of Japan Monetary Policy Meeting (December 18-19)

This is the final meeting of the year. While the market consensus is that an additional rate hike is unlikely, the main focus is on Governor Ueda's 'words'.

Will there be a hawkish (pro-rate hike) message for 2026, or a dovish (cautious) one? That single word could completely change the market mood.

* Decision on the Tax Reform Outline (late December)

This will determine the outcome of the '1.03 million yen wall' (the income tax threshold) and the review of dependency deductions, which are directly linked to our daily lives.

Since this directly affects household real income and, by extension, consumer appetite for retail and services, it is a factor that the stock market cannot ignore.

Future scenarios and points of caution

The apex of the symmetrical triangle has reached its absolute limit.

These three events will act as triggers, and stock prices will likely move in one direction or the other.

However, one must be wary of a 'False Breakout'.

Because market sentiment is prone to volatility before major events, the price may appear to cross the line for a moment only to immediately pull back. It will be important to judge not just the fact that the line was crossed, but also the underlying factors (the results of the events).

Let us keep a close watch on the outcome of this quiet battle.