nikkei 225 further potential up move above 19160 support 2691562017

Short-term Technical Outlook (Wed, 16 Apr 2017)

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has staged a break above its 19100 excess medium-term pivotal resistance which in line with the bullish break on the USD/JPY medium-term pivotal resistance of 110.63.

The “risk-on herd mentality” positive feedback loop triggered by the outcome of the 1^st round of the French presidential election  remains intact after yesterday’s intermarket price action from main U.S. benchmark stock indices; the S&P 500 and Nasdaq 100.

Therefore, the initial further corrective down move bias on the Japan 225 Index has been invalidated.

Key technical elements

• The daily RSI oscillator of the Index has broken above its resistances and still has room for further potential upside before it reaches an extreme overbought level. These observations suggest the recent upside momentum of price action remains intact.
• The shorter-term Stochastic oscillator is still hovering above its overbought region without any clear bearish divergence signal which reinforces that short-term price action still has potential to shape another upleg.
• The key short-term support now rests at 19160 which is defined by today’s Asian session low and close to the 23.6% Fibonacci retracement of the recent rally from 25 April 2017 low of 18862 to today’s (26 Apr) current intraday high.
• The next significant short-term resistances stand at 19350/380 (29 Mar 2017 swing high & 0.618 Fibonacci projection from 17 Apr 2017 low) and 19500 (the pull-back resistance of the former “Ascending Wedge” support from 18 Jan 2017 low, pull-back resistance of the ascending trendline support from 24 Jun 2016 low & a Fibonacci projection cluster).
• Short-term technical elements are still positive for USD/JPY which advocates for further potential upside to target its next resistance at 112.00/112.20. Based on intermarket analysis, a further potential upside in USD/JPY is likely to translate to a further rally in the Nikkei 225 given its direct correlation with USD/JPY

Key levels (1 to 3 days)

Intermediate support: 19230

Pivot (key support): 19160

Resistances: 18350/380 & 19500

Next support: 19000

Conclusion

As long as the 19160 short-term pivotal support holds, the Index is likely to shape another potential upleg to target the next resistances at 18350/380 and 19500 next.

However, failure to hold above 19160 may negate the preferred bullish tone to see a deeper slide towards the next support at 19000.

Charts are from City Index Advantage TraderPro

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