Chart of the day Nikkei 225 held above key short term support as BOJ looms

Short-term technical outlook on Nikkei 225 (Tues, 31 Oct 2017)

Key technical elements

• After the Japan 225 Index (proxy for the Nikkei 225 futures)  printed a high of 22121 last Friday, 27 October which was a level that was not seen for more than 15 years, it had started to stage a pull-back of 1.2% throughout yesterday (30 Oct) and printed a low of 21844 in the U.S. session. Interestingly, the aforementioned pull-back has managed to stall right at a key short-term support of 21800/755 (see 4 hour chart).
• The key short-term support of 21800/755 is defined by the lower boundary of a minor ascending channel from 19 October 2017 low (depicted in dark blue), former minor swing area of  26 October 2017 and a Fibonacci retracement cluster (see 1 hour chart).
• Price action momentum has started to turn positive. The 4 hour Stochastic oscillator has started to reversed up from its oversold region coupled with a bullish divergence signal seen in the shorter-term 1 hour Stochastic oscillator.
• The next short-term significant resistance stands at 22315 which is defined by the upper boundary of the aforementioned minor ascending channel (depicted in dark blue) and the 1.00 Fibonacci projection of the up move from 19 October 2017 low to 25 October 2017 high projected from 25 October 2017 low.

Key Levels (1 to 3 days)

Intermediate support: 21900

Pivot (key support): 21800/755

Resistances: 22100, 22315 & 22475/500

Next support: 21450 (medium-term pivot)

Conclusion

Therefore, as long as the 21800/755  key short-term pivotal support holds, the Index is likely to shape another potential bullish impulsive upleg to retest the recent swing high of 22100 before targeting the next resistance at 22315. An important point to note is that the Index may be in the midst of undergoing a “final push up” before a potential multi-week corrective down move occurs (click here for more details as per highlighted in our latest weekly technical outlook published yesterday)

On the other hand, a break below 21800/755 shall negate the bullish tone to see a deeper slide to test the 21450 medium-term pivotal support.

Charts are from City Index Advantage TraderPro

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