nikkei 225 daily outlook thurs 03 dec potential dip towards 19700 support area before recovery 17890

(Click to enlarge chart)

What happened earlier

The Japan 225 (proxy for the Nikkei 225) has shaped the expected pull-back below the 20050 “acceleration level” as market participants await for the key monetary policy decision by the European Central Bank (ECB) later today @1245GMT

Key elements

• Current pull-back in price action is now residing in the “middle” of the sideways range configuration between 20050 and 19700 in place since 19 November 2015.
• The short-term key support remains at 19700 which is also the lower boundary of the medium-term bullish ascending channel in place since 29 September 2015 low.
• The hourly (short-term) Stochastic oscillator has turned down near its overbought region and still has further potential downside before reaching its oversold region. This observation suggests that the current pull-back in price action is not yet over and the Index may see another dip close to the 19700 short-term key support.

Key levels (1 to 3 days)

Pivot (key support): 19700

Resistance: 20050, 20190 & 20450

Next support: 19190 (weekly pivot)

Conclusion

The medium-term bullish trend remains intact but short-term technical elements are still advocating for further potential dip in price action of the Index. As long as the daily (short-term) pivotal support at 19700 holds, the Index is likely to shape a recovery to retest the short-term range top at 20050 before targeting the next resistance at 20190.

However, a break below the 19700 short-term pivotal support is likely to see a deeper pull-back to test the next support at 19190 (weekly pivot).

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