nikkei 225 daily outlook thurs 22 oct watch 18740 18450 1634372015

(Click to enlarge charts)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has pierced above the 18450 short-term pivotal resistance and invalidated preferred the pull-back scenario.

Please click on this link for a recap on our previous daily outlook.

Key elements

• Current price action is now coming close to the swing highs area of 09 September and 17 September at 18740.
• The daily (medium-term) RSI oscillator continues to shape “higher lows” at its support and  it is now challenging its key trendline resistance in place since 23 March 2015. These observations suggest that upside momentum is starting to show signs of a revival.
• The next significant resistance stands at 19190 which that confluences with the 1.00 Fibonacci projection (minimum 3^rd wave target) from 29 September 2015 low to 07 October 2015 high @12pm projected from 15 October 2015 low @12am and the swing high 28 August 2015/ the former support joining the lows of 01 April 2015, 07 May 2015 and 09 July 2015 now turns pull-back resistance/200-day Moving Average.
• The hourly (short-term) Stochastic oscillator is coming close to its extreme overbought level which suggests the Index may be due for a short-term pull-back in price action.
• The short-term support to watch will be at 18450 which is the former range top from 07 October 2015 and close to the 23.6% Fibonacci retracement of the recent up move from 15 October 2015 low @3am to 21 October 2015 high @1pm.

Key levels (1 to 3 days)

Resistance: 18740 & 19190

Support: 18450, 18150 & 18000

Conclusion  

From a medium-term perspective (1 to 3 weeks), the Index has started to show signs that it is likely to resume the upside movement (wave 3/) of its uptrend in place since 29 September 2015.

On the short-term, technical elements are mixed at the moment. Therefore, it will be prudent to turn neutral between 18740 and 18450. A break below 18450 may see a slide to retest the next support at 18150 and even 18000 (the lower boundary of the ascending channel in place since 29 September 2015 low).

On the other hand, a clearance above 18740 is likely to see another round of rally towards the key 19190 medium-term resistance.

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