nikkei 225 daily outlook 01 mar 2016 back to range support at 15540 for a potential upswing 17992520

(Click to enlarge charts)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has drifted down from the 16500 range top and continued its slide in the U.S. session in line with the major U.S. stock indices.

Key elements

• The Index is now trading close to the bottom of the sideways range environment in place since 16 February 2016 high which is also the 15540 medium-term pivotal support for this week (click here for more details on our latest weekly outlook/strategy).
• The hourly (short-term) Stochastic oscillator has dipped back down towards its oversold region which suggests a potential upturn in price action.
• The significant short-term resistance remains at 16500 which is the upper boundary of the descending channel in place since 18 December 2015 high as well as last Friday, 26 February 2016 minor swing high.

Key levels (1 to 3 days)

Intermediate support: 15700

Pivot (key support): 15540

Resistance: 16500

Next support: 14780

Conclusion

Expect a further potential dip down to test 15700 with a maximum limit set at the 15540 medium-term pivotal support before another potential upswing occurs to retest the 16500 resistance (range top).

However, a break below the 15540 pivotal support is likely to invalidated the second phase of the countertrend rally for a deeper slide to retest the 12 February 2016 swing low area at 14780.

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