nikkei 225 daily outlook fri 22 apr 2016 view unchanged potential last push up towards 17770 1807732

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has staged the further expected push up towards the first short-term target at 17450 (printed a high of 17415 in the European session) before it pull-backed as expected in the U.S. session in line with the major U.S. stock indices.

This morning, 22 April 2016, the Index has managed to stage a rebound (printed a current session low of 17138) just above the 17080 predefined short-term pivotal support of 17080 highlighted in our short-term technical outlook/strategy published yesterday. On the contrary, the only key Japanese economic date release today is the Nikkei Manufacturing PMI (provisional) for April that came in at 48.00 (indicates a contraction in manufacturing activities) which is below market expectation of 49.6.  The fundamental factor that is driving this morning’s rebound is due to a market talk that in the BOJ meeting on next Thursday, April 28 2016, the central bank policy makers may embark on buying more Japanese equities related ETFs to spur demand growth indirectly.

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

Key elements

• The Index continues to evolve within a short-term bullish ascending channel in place since 08 April 2016 low with its upper boundary (resistance) at 17770.
• The short-term ascending channel resistance of 17770 also confluences closely with the medium-term swing high area of 29 January 2016 and a Fibonacci cluster from various degrees (see daily & hourly charts).
• The daily (medium-term) RSI oscillator remains bullish above its former trendline resistance now turns pull-back support (in dotted green). It also still shows further upside potential before reaching its extreme overbought level. These observations suggest that medium-term upside momentum of price action remains intact (see daily chart).
•  The hourly (short-term) Stochastic oscillator is still bullish but it is fast approaching its extreme overbought level where the Index may see a short-term pull-back in price actions towards the intermediate support at 17250.
• The significant short-term support remains at 17080 which is defined by the former minor swing high area of 19 April 2016.

Key levels (1 to 3 days)

Intermediate support: 17250

Pivot (key support): 17080

Resistances: 17450 & 17770

Next support: 16860/720

Conclusion

View remains unchanged. As long as the 17080 short-term pivotal support holds, the Index is still in progress of undergoing its potential “last push up” trajectory towards 17450 before the 177770 resistance.

On the other hand, a break below the 17080 short-term pivotal support may negate the bullish tone for a slide towards the next support at 16860/720 (the lower boundary of the short-term ascending channel and pull-back support of former range bullish breakout).

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