nikkei 225 daily outlook thurs 31 mar 2016 push up before another potential downleg below 1707017135

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has staged a decline as expected from the “contracting/symmetrical triangle” range top at 17135.

In this morning session, 31 March 2016, it has almost hit our short-term downside target at 16750 (printed a low of 16840). Please click on this link for a recap on our previous short-term/daily outlook/strategy.

Key elements

• The 4 hour Stochastic oscillator is still oriented to the downside and still has ample room for further potential decline before reaching its extreme oversold level.
• However, the shorter-term hourly Stochastic has just exited from its oversold level which indicates a potential “relief rebound” after this morning session’s slide.
• The intermediate resistance below the “contracting/symmetrical triangle” range top stands at 17070 which is defined by the minor swing high area of 30 March 2016 @11pm.

Key levels (1 to 3 days)

Intermediate resistance: 17070

Pivot (key resistance): 17135

Supports: 16750 & 16570/500

Next resistance:  17315 (weekly/medium-term pivot)

Conclusion

The Index may see a rebound first towards the intermediate resistance at 17070 before another potential downleg occurs to target the 16750 level. Only a break below 16750 is likely to trigger a further slide towards the range bottom at 16570/500.

However, a clearance above the 17135 short-term pivotal resistance may negate the bearish tone to see a push up to test the 17315 weekly (medium-term) pivotal resistance.

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