nikkei 225 daily outlook fri 20 may 2016 coming close to 16720820 pivotal resistance for a potential

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has continued to trade in a sideways fashion below the 16720/820 medium-term pivotal resistance after it hit the first short-term target (support) at 16510.

Key elements

• Today’s morning push up in price action which is in line with the late short squeeze seen in the major benchmark U.S. stock indices before the close of the U.S. session is now right at a minor pull-back resistance (in thin red) from 16 May 2016 low @6am.
• The significant short-term support remains at 16200 (pull-back support of the former minor rectangle/consolidation configuration bullish breakout that occurred on 09 May 2016).
• Price action continues to be capped by the descending trendline resistance in place since 21 April 2016 high which also confluences with the 16720/820 medium-term pivotal resistance.
• The 4 hour and the hourly Stochastic oscillators are now back at their respective overbought regions which indicates another round of potential pull-back within the range that is in place since 16 May 2016 low.

Key levels (1 to 3 days)

Pivot (key resistance): 16720/820

Support: 16510 & 16200

Next resistance: 17240

Conclusion

As long as the 16720/820 pivotal resistance is not surpassed, the Index is likely to shape a push down to retest 16510 and a break below it may see a further decline to target  the range support at 16200.

On the other hand, a clearance above the 16720/820 medium-term pivotal resistance is likely to invalidate the medium-term bearish view for a further push up target the next resistance at 17240.

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