nikkei 225 daily outlook fri 04 mar 2016 1746517100 is the critical resistance to watch now for a po

(Click to enlarge charts)

What happened yesterday/earlier

The Japan 225 (proxy for the Nikkei 225 futures) has started to shaped the expected push up earlier this morning, 04 March 2015 after the U.S. S&P 500 surged to a new weekly high overnight.

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

Key elements

• Current price action is now coming close to a significant short-term resistance zone at 17100/17465 which is defined by multiple Fibonacci projection cluster taken from different swing lows and the upper boundary (resistance) of the bullish ascending channel in place since the start of the countertrend rally at 12 February 2016 low.
• Based on the Elliot Wave Principal, the Index is likely to be shaping the final leg of the wave 3 that started from 01 March 2016 low of 15854 which a potential end target at 17465 which is defined by the 1.1618 Fibonacci projection the length of wave 1 projected from the low of wave 2 at 1585 printed on 01 March 2016 @10am. Thereafter, the Index should shape a potential pull-back of the wave 4 within a bullish impulsive wave sequence (labelled as 1,2,3,4,5) of a minor degree (multi-days) that started from 24 February 2016 low of 15540.
• The 4 hour Stochastic oscillator has shaped a bearish divergence signal at its overbought region which suggests that the current upside momentum in price is waning. This observation reinforces the expected pull-back in price action of the Index.

Key levels (1 to 3 days)

Intermediate resistance: 17100/220

Pivot (key resistance): 17465

Support: 16600/500

Next resistance: 17900

Conclusion

The current short-term uptrend of the Index from 24 February 2016 low of 15540 is approaching a significant resistance at 17100 which is also our first medium-term upside target for this week (click here to recap our weekly outlook).

Short-term technical elements are getting exhausted on the upside, thus the Index may shape a final potential push up to test the 17100/220 intermediate resistance with a maximum limit set at the 17465 short-term pivotal resistance before a potential pull-back/consolidation occurs to target the 16600/500 support (pull-back of the bullish breakout of the former descending channel from 18 December 2015 high).

On the flipside, a clearance above the 17465 short-term pivotal resistance is likely to invalidate the pull-back scenario for a further rally towards the next resistance at 17900.

Disclaimer

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