nikkei 225 daily outlook thurs 02 june 2016 potential further drop below 16750 resistance 1813942016

(Click to enlarge charts) What happened earlier/yesterday The Japan 225 Index (proxy for the Nikkei 225 futures) has broken both the short and medium-term pivotal […]


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By :  ,  Financial Analyst

Japan Index (daily)_02 Jun 2016

Japan Index (1 hour)_02 Jun 2016(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has broken both the short and medium-term pivotal supports at 16990 and 16740 respectively.

The preferred medium-term corrective rebound scenario towards the range top has been invalidated. Please click on this link to recap our previous daily short-term outlook/strategy.

Key elements

  • The bearish breakdown from 16740 has led to Index to see a downside risk to test the ascending range support (in purple) in place since 12 February 2016 low at 15820/615 (see daily chart).
  • In conjunction, the daily (medium-term) RSI oscillator has broken below the first support and 50% neutrality level which reaffirms further downside pressure for the Index.
  • The significant short-term resistance is now at 16750 which is the former pull-back support of the short-term rectangle range.
  • The short-term support rests at 16330 as defined by the minor swing low areas of 13/16 May 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 16750

Support: 16300

Next resistance: 16990 & 17300

Conclusion

The tide has turned back to the bears within the ascending range. Right now, the Index may see a direct drop towards the next support at 16300 in the first step below the 16750 daily short-term pivotal resistance.

Only a break above the 16750 short-term pivotal resistance is likely to negate the  bearish one to see a relief rally back towards the next resistance at 16990.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

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