nikkei 225 daily outlook for tues 18 aug poised for a potential short term bullish breakout 10601920

(Click to enlarge chart)

What happened yesterday

The latest Q2 Japan Gross Domestic Product annualised figure came in at -1.6% which is slightly better than expectation of -1.9%.

Interestingly, the Japan 225 (proxy for the Nikkei 225) has treated this GDP release as a “non-event” where it continued to trade within the 160 points range which is below the current rolling 14-day Average True Range of 233 points.

Key elements

• Since 13 August 2015 high @2pm, the Index appears to have evolved into an impending bullish continuation chart pattern called “Ascending Triangle” with a neckline resistance at 20680.
• The current price action has retraced towards the trendline support of the “Ascending Triangle” now at 20520.
• The exit potential of the ‘Ascending Triangle” stands at 20850/20960 which confluences with the June/July 2015 range top.
• The hourly Stochastic oscillator is hovering close to its oversold region which suggests an imminent rebound in price action of the Index is round the corner.

Key levels

Intermediate support: 20520

Pivot (key support): 20470

Resistance: 20680 & 20850/20960

Next support: 20050 (weekly pivot)

Conclusion

The Index may now see a rebound towards the neckline resistance of the “Ascending Triangle” at 20680, holding above the key short-term support zone at 20520/20470. A break above 20680 is likely to trigger a further upside movement to target the 20850/20960 intermediate range top.

However, failure to hold above the 20470 daily pivotal support is likely to damage the bullish tone to see a slide to retest the weekly pivotal support at 20050.

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