nikkei 225 daily outlook for wed 05 aug further potential rally above 20380 support 962282015

(Click to enlarge chart)

Key elements

• The Japan 225 (proxy for the Nikkei 225) has continued to trade within a short-term ascending channel (in brown) in place since 27 July 2015 low @9pm.
• The upper of boundary of the ascending channel stands at 20850/20960 which confluences with the  recent swing highs of both June and July 2015 and the 76.4 Fibonacci projection from 27 July 2015 low @9pm to 03 August 2015 low @9am
• The hourly Stochastic oscillator has just inched up close to its oversold region.
• Based on the Elliot Wave Principal, the Index is now undergoing a bullish impulsive 5-wave structure of a lower degree from the 27 July 2015 low @9pm, current price action is now in the midst of the fifth wave to complete the potential wave i at 20850 (the 5^th wave projection based on the 76.4 Fibonacci projection level).

Key levels

Pivot (key support): 20380

Resistance: 20850/20960

Next support: 20050 (weekly pivot)

Conclusion

Current short-term technical elements suggest a bullish environment for the Index. As long as the 20380 daily pivotal support is not broken, the Index is likely to see a further potential rally to target 20850/20960 next.

However, failure to hold above the 20380 key short-term support is likely to negate the bullish tone for a slide to test the 20050 weekly pivotal support (please click on this link to view our latest weekly outlook).

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