nikkei 225 daily outlook fri 01 apr 2016 expected bearish breakout from range more potential downsid

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has shaped the expected decline and hit our short-term downside target at 16570/16500 (the range support of the “contracting/symmetrical triangle”)

Please click on this link for a recap on our previous short-term/daily outlook/strategy.

Key elements

• In this morning session, the Index has staged the bearish breakout from the “contracting/symmetrical triangle” range configuration. Most importantly, we have anticipated this breakout earlier in our weekly outlook/strategy published on Monday (click here for details).
• In the short-term now, the pivotal resistance to keep this on-going bearish bias will be at 16680 which is close the pull-back resistance of the “contracting/symmetrical triangle” range bearish breakout and the 50% Fibonacci retracement from the high of 01 April 2016@12am to the current low of 16325 ( the risk of a typical wave 4 corrective snap-back in this scenario based on the Elliot Wave Principal).
• Based on the Elliot Wave Principal, the Index now is likely to be undergoing a bearish impulsive wave 3 of a minor degree within a typical 5 waves structure of  down move of a wave c/ (intermediate degree) that started from 28 March 2016 high of 17172.
• The short-term supports before the expected mid-term downside target at 15750 will be at 16290 (2.618 Fibonacci projection) and 16090/16000 (cluster zone projection of 3.618 & 2.00).
• Both the 1 and 4 hour (short-term) Stochastic oscillators are coming close to their respective extreme oversold levels. These observations highlight the risk of a “relief rebound” around the first support of 16290.

Key levels (1 to 3 days)

Pivot (key resistance): 16680

Supports: 16290 & 16090/16000

Next resistance:  17135

Conclusion

Technical elements remain bearish. Right now, short-term pivotal resistance will be at 16680 for a further potential decline towards 16290 (risk of a minor rebound here) before 16090/16000.

However, a break above the 16680 pivotal resistance is likely to invalidate the bearish tone to see another round of choppy movement back up towards the 17135 range top.

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