Chart of the day Nikkei 225 short term bearish breakdown

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By :  ,  Financial Analyst

Short-term technical outlook on Nikkei 225 (Tues, 29 Aug 2017)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) had gapped down in today (29 Aug) early Asian and almost hit the short-term downside target/support at 19050 (printed a low of 19053) in the aftermath of a sudden unprecedented missile test from North Korea that flew past Japan.

The drop in the Japan 225 Index should not be a surprise as we have highlighted in our weekly technical outlook reports on its negative elements (click here & here for a recap).  Also, as per highlighted on our last Friday (25 Aug) Chart of the day on the impending short-term bearish breakdown on the USD/JPY that will also have a negative impact on the Nikkei 225 due to its high direct correlation with the Index (click here for a recap).

Key elements

  • This morning gapped down has almost been filled as the current rebound from the 19050 short-term support has stalled at the pull-back resistance of a former minor support from 21 August 2017 low (depicted in dotted red).
  • The key short-term resistance now stands at 19415 which is defined by the upper boundary of a short-term descending channel in place since 07 August 2017 and close to the 76.4% Fibonacci retracement of recent plunge from 25 August 2017 minor swing high to today’s current intraday low of 19053.
  • The next support will be at 18860 which is our key medium-term support as per highlighted in our latest weekly technical outlook report published yesterday, 28 August and now the\  lower boundary of the aforementioned descending channel.

Key Levels (1 to 3 days)

Pivot (key resistance): 19415

Supports: 19050 & 18860

Next resistances: 19560 & 19800 (medium-term pivot)


Therefore, as long as the 19415 short-term pivotal resistance is not surpassed, the Index is likely to shape another potential corrective downleg to retest the 19050 near-term support before targeting the medium-term support at 18860.

On the other hand, a clearance above 19415 should negate the current bearish tone for a corrective rebound to test the next resistance at 19560 (minor swing high areas of 19 Aug/23 Aug 2017) and above it may see a further push up towards the 19800 medium-term pivotal resistance.

Chart is from City Index Advantage TraderPro


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