(Bloomberg) -- The biggest selloff in decades for Japanese stocks is over for now, according to a chart pattern that accurately signaled the short-term bottom of a rout triggered by the 2011 tsunami.
The Nikkei 225 Stock Average on Tuesday formed a candlestick whose body was located within the range of the previous day’s, generating a so-called harami pattern that indicates a reversal during a downtrend.
The technical signal suggests investor sentiment has shifted from one that’s dominated by pessimism to one that’s a tug-of-war between bears and bulls.
Japanese stocks tumbled into a bear market on Monday in a broad flight from risk amid a stronger yen, tighter monetary policy and concern over the US economy’s outlook. Shares sharply rebounded the next day.
When a bullish harami sign appeared on March 16, 2011 following the plunge after the tsunami and Fukushima nuclear meltdown, the Nikkei climbed 10% over the next month and a half.
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