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Japan’s Nikkei 225 index is losing momentum after the strong rally. In mid-December 2012 I drew attention to the strong breakout in Japanese equities (December 19, 2012 – Japan Nikkei 225 [3]) supported by a weakening Yen. Breakout from a 3 year-long downtrend at 10,000 levels was followed by a sharp upward move. As we got closer to 12,000 levels on the index, momentum and volume declined. This is a concern and should be taken as a warning signal for a possible correction towards 11,400 levels. Two charts above show the weekly and daily scale of the Nikkei 225 index.