By Doug Busch
Japan is becoming an attractive place to invest thanks to improving business conditions. Companies are focusing more on profits and returning cash to shareholders through dividends and buybacks, while a weaker yen helps boost earnings for exporters.
At the same time, easy monetary policy and signs that the economy is moving past years of slow growth are creating a more favorable environment for stocks.
That belief is seen through the lens of the Nikkei 225. The index is on a three-week losing streak and has not recorded a four-week skid since July-August 2024.
Looking at its weekly chart dating back three years shows that it has been outperforming the S&P 500 as it retests a cup with handle breakout on the ratio chart. Round number theory first played a role with long range spinning top candles at 30000 in August 2024 and last April.
In late June it broke above a double bottom pattern at 40000, and in early January, it broke above a bull flag pivot at 50,000. It is now retesting that breakout after being rejected at 60000 in late February. One can see the 50 week simple moving average catching up in price and I think this can travel toward 70000 by year-end, based on the measured move from the flag breakout. That would be a gain of 37% from current prices. Remain bullish above 47000.
The Nikkei 225 was trading around Yen52000 Tuesday.
Let's look at two names that appear well positioned to move higher in the periods ahead.
Toyota Motor, a global automobile manufacturer, is up 10% over the last one year period, but down fractionally in 2026. The last three weeks all closed at the low for the weekly range starting with a 10% plunge the first week of March. The ratio chart against rival Honda Motor has been a strong actor since last summer.
Looking at its weekly chart, it resembles a double top near $250, but I interpret the current pullback as the start of a handle on a cup base. Notice the initial peak was accompanied by topping candles, including a bearish shooting star and two dojis in March-April 2024.
The stock has returned to the very round $200 level, which was prior resistance that should now turn into support, during the first nine months of 2025. Notice bottoms in this possible cup were formed with positive candlestick patterns, including a bullish morning star and piercing line in the summer of 2024 and spring of 2025. I feel the stock could return toward $250 by the second half, which would be a 18% gain from current prices. Remain bullish above $195.
Toyota ADR was trading around $208 Tuesday.
Mitsubishi UFJ Financial Group, a global investment giant, is higher by 11% over the last year and 5% year to date. On the ratio chart against regional peer Nomura it has performed well since the start of 2026. The stock is trying to end its first four-week losing streak in two years.
Looking at its daily chart, the stock recently came close to testing its 200-day simple moving average for the first time since the "Liberation Day" lows, a level that often serves as key technical support. It is now retesting a prior cup-with-handle breakout above the $16.66 pivot taken out on Jan. 8.
While the stock was firmly rejected near the $20 level on Feb. 12, the current pullback appears constructive. A purchase at these levels looks attractive with a move back toward $20 by mid-2026 implying roughly 20% upside from current prices. Investors could look to add above the double bottom pivot at $17.89, while maintaining a bullish stance as long as the stock holds above $15.75.
Mitsubishi UFJ Financial Group was trading around $16.60 Tuesday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 24, 2026 11:22 ET (15:22 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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