(MENAFN- Daily Forex) The Nikkei 225 produced a strong gap higher earlier today when the Japanese stock market began its trading, this after a weekend announcement in Japan by the Liberal Democratic Party that Sanae Takaichi has been nominated to lead the government.

Although Sanae Takaichi will not be formally approved by the Japanese Parliament until the middle of October as Prime Minister, investors clearly showed their approval as the Nikkei 225 gapped higher significantly when it began to trade early this morning. The Nikkei 225 finished Friday's trading near the 46,010 ratio before going into this past weekend.

Upon opening this morning for the start of trading this week the Nikkei 225 began its trading near the 46,925 vicinity and came within sight of an apex nearly at 48,600. As of this moment investors have pumped the brakes slightly and shown a bit more caution, but the Nikkei remains around 48,050 as of this writing with very fast trading being seen. Day traders who like volatility can pursue the Nikkei 225 via CFD trades, but extreme caution is advised and Near-Term and Higher Targets

Sanae Takaichi is viewed as a conservative in Japan and her advancement to the top level of the Liberal Democratic Party leadership has clearly been viewed favorably by Japanese financial institutions. The jump higher in the Nikkei 225 this morning shows what positive behavioral sentiment can produce in a very optimistic stock market. The Nikkei 225 was already within apex highs going into this past weekend.

The news that Takaichi will almost certainly become the Prime Minister in mid-October created a strong buying pulse which certainly brought ambitious targets into sight. The reversals lower after highs were hit this morning is a healthy sign for the Nikkei 225, it shows that financial institutions aren't betting blindly on upside. Yet, momentum higher over the near-term may be a legitimate ambition. Speculators need to understand the Nikkei 225 has always had a capability of moving fast – up and down - and the use of conservative leverage is certainly needed.

Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Nikkei 225 Optimism and Signals

Conservative traders who want to pursue the Nikkei 225 may want some technical support levels to be touched before entering a buying position for the Japanese index. Yes, traders can also try to sell when they believe resistance levels will cause a downwards reaction.

• However, in the near-term it may prove unwise to bet against the positive sentiment being generated in Japan within financial institutions.
• Looking for a durable level around the 48,000 mark may prove important in the short and near-term.
• If the 48,000 show it is capable of maintaining value, then large traders may believe that psychological targets are going to become targets.
• Perhaps it is too much to dream about regarding the 49,000 to 50,000 levels for the Nikkei 225 for day traders, but large financial institutions with the ability to hold onto a position are certainly visualizing these higher values – it is a question of when it will happen.

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Nikkei 225 Short-Term Outlook:

Current Resistance: 48,200

Current Support: 47,925

High Target: 48,900

Low Target: 47,800

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