chart of the day nikkei 225 on support for further potential push up 1856562017

Short-term technical outlook on Nikkei 225 (Fri, 21 Jul 2017)

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) had started to trade higher after BOI’s latest monetary policy announcement and the release of its latest economic outlook projections where it had downgraded its inflationary expectations. This set of latest actions/stance adopted by BOJ had indicated its intention that an exit from its current quantitative easing polices are still not round the corner in 2017.

Key elements

• The recent pull-backed in price action from the 20 July 2017 minor swing high of 20164 has managed to stage right at a significant support zone of 20080/20000 this is being defined by a confluence of elements. Its former minor descending range resistance from 11 July 2017 now turns pull-back support, the lower boundary of a short-term ascending channel in place since 18 July 2017 swing low (depicted in light green in the 1 hour chart) and the lower boundary of a medium-term ascending channel in place since 17 May 2017 low (depicted in blue in the daily chart).
• The hourly Stochastic oscillator has continued to inch upwards and still has room to manoeuvre to the upside before it reaches an extreme overbought level. These observations suggest that short-term upside momentum of price action remains intact.
• The next significant short-term resistance stands at 20260/300 which is defined by the range resistance in place since 02 June 2017, the upper boundary  of the aforementioned short-term ascending channel and the 1.00 Fibonacci projection of the recent up move from 18 July 2017 minor swing low to 20 July 2017 high projected from the pull-backed low of 20 July 2017 (see daily & hourly charts).
• Based on intermarket analysis, the movement of the USD/JPY which has a high direct correlation with the Nikkei 225 in the short-term has managed to find support at its key short-term support at 111.60/50 ( refer to this link on an earlier report on USD/JPY). The latest price movement of USD/JPY is likely to be supportive of a potential short-term upside mvoe in the Nikkei 225.

Key Levels (1 to 3 days)

Intermediate support: 20080

Pivot (key support): 20000

Resistances: 20200 & 20260/300

Next support: 19930

Conclusion

As long as the 20000 short-term pivotal support holds, the Index may shape a further push up to retest 20200 follow by its near-term range resistance of 20260/300 in the first step.

However, failure to hold above 2000 should see another round of choppy decline to retest the 19930 support (18 July 2017 minor swing low).

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