nikkei 225 daily outlook thurs 14 jan 2016 looking for a retest on 16900 long term key support 17931

(Click to enlarge charts)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has plummeted again in the overnight U.S. session in line with the major U.S. indices. The Index has broken below yesterday short-term pivotal support at 17380 and invalidated our preferred bullish scenario.

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

Key elements

• The Index did not have a follow through after the bullish breakout from the short-term descending channel and reintegrated back below the descending channel’s upper boundary (see 1 hour chart).
• The short-term pull-back resistance that has linked the previous lows of 09 January 2016 to 13 January 2015 is now capping the Index at 17270 (see 1 hour chart).
• The Index is now holding above its key long-term support at 16900 (see weekly chart).
• The hourly (short-term) Stochastic oscillator has exited from its oversold region which suggests that the downside momentum seen in today’s earlier Asian session has started to abate.

Key levels (1 to 3 days)

Supports: 16900 (long-term) & 16480

Resistances: 17270 & 17700

Conclusion

Even though the Index is still trading above the 16900 key long-term support but technical elements have not shown any clear signs of a bullish reversal. Therefore, we have turned neutral between 16900 and 17270.

Only a clear break above 17270 is likely to see a short-term push up to retest yesterday’s minor swing high at 17700. On the flipside, failure to hold above the key long-term support at 16900 may invalidate the long-term bullish trend in place since March 2009 to see a further drop to test the next short-term support at 16480.

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