nikkei 225 daily outlook fri 06 nov at pull back support of former range tops bullish breakout point

(Click to enlarge chart)

What happened yesterday

In line with our expectation, the Japan 225 (proxy for the Nikkei 225) has managed to stage the bullish breakout above the 19190 short-term range top in the European session. It printed a high of 19345 before profit-taking took place later in the U.S. session as the market waits for today’s key economic data release on the latest non-farm payrolls for October.

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

Key elements

• Current price action has pull-backed towards the former range top now turns support at 19190/19150 which also coincides with the lower boundary of a short-term bullish ascending channel (in orange) in place since the 02 November 2015 @11am.
• The corresponding hourly (short-term) RSI oscillator that gauges price momentum is also resting at its trendline support and the 50% neutrality level.
• The key intermediate resistance to watch remains at 19640 which is defined by the 1.618 Fibonacci projection from 02 November 2015 low @12pm to the 03 November 2015 high @8am projected from the recent low of 03 November 2015 @8pm and also a 1.00 Fibonacci projection from a lower degree. Also, in terms of Elliot Wave Principal, the Index is likely in the midst of undergoing the bullish wave 3 of the larger degree wave 5/. This current medium-term bullish impulsive wave structure remains intact since the 29 September 2015 low.

Key levels (1 to 3 days)

Pivot (key support): 19150

Resistance: 19640 & 20050

Next support: 18930 & 18600

Conclusion

Short-term technical elements are still positive with the key pivotal support at 19150 to see another round of potential upside movement to test the 19640 resistance.

On the other hand, a break below the 19150 daily (short-term) pivotal support is likely to negate the bullish tone for a further slide back towards the next support at 18930 and even the lower boundary of the longer-term ascending channel that is closed to the wave 4/ low area at 18600.

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