Since Abe's election in November, the Japanese ETF has rallied strongly, rising from a low of 8.75 to ~12.50, for a net gain of about 43%. Prices dropped through support at the beginning of June on very strong volume, indicating that traders were concerned about the strength of the rally relative to the underlying economic fundamentals (essentially asking have we risen too far too fast). Prices fell to the 200 day EMAn which is also near the 50% Fib level.
The weekly charts shows that prices have found support around the 61.8% Fib level for the mid-2012/mid-2013 price levels.
My guess is we'll continue to see a thinning out of the rally trade as people take more of a wait and see attitude about Abe's policies. However, news like this certainly won't hurt:
Japan has revised up its first-quarter economic growth to 1 per cent, giving Prime Minister Shinzo Abe a boost as he seeks to strengthen his grip on power in next month’s upper house elections.
Government data released on Monday showed that the economy expanded at an annualised rate of 4.1 per cent between January and March, lifted by strong household spending and a pick-up in private residential investment. That was much higher than the preliminary estimate of 3.5 per cent, which was already the fastest rate recorded by any Group of Seven economy.
