nikkei 225 daily outlook thurs 25 feb 2016 below short term range top at 16350500 for a potential pu

Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has staged the expected decline from the range top at 16500 towards the 15700 short-term downside target.

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

Key elements

• The Index has rallied sharply (2.6%) in the U.S. session from the short-term range support at 15700 in place since 16 February 2016 high (printed a low of 15540 in the overnight U.S. session).
• Current price action is now hovering again just below the short-term range top at 16350 which is also close to the lower boundary (resistance) of the descending channel in place since 18 December 2015 high now at 16500.
• The hourly (short-term) short-term Stochastic oscillator has just exited from its overbought region and still has room for further downside before reaching its extreme oversold level. This observation suggests that the current upside momentum seen in the current push up is being overstretched and the Index faces the risk of another decline back towards its range support.

Key levels (1 to 3 days)

Pivot (key resistance): 16350/500

Support: 15700/600

Next resistance: 17100

Conclusion

The Index has continued to trade in a sideways range environment since 16 February 2016 high of 16342. Current price action is being push up just below the range top of 16350/500 and technical elements are suggested another push back down towards the range support at 15700/600.

On the other hand, a clearance above the 16350/500 short-term pivotal resistance (range top) may see a squeeze up to target the next resistance at 17100 (also the 1.00 Fibonacci projection of the rally seen from 12 February 2016 low to 16 February 2016 high of 16342 @12pm projected from yesterday’s low of 15540).

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