nikkei 225 daily outlook tues 05 apr 2016 bearish breakout maintain bearish bias below 16070 resista

(Click to enlarge chart)

What happened earlier/yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has completed the minor rebound/consolidation (highlighted in dotted dark blue lines, descending triangle) that was formed after last Friday, 01 April 2016’s steep plunge towards the 16000 short-term expected downside target.

Key elements

• This morning price action has confirmed our prevailing bearish bias on the Index as it staged the expected bearish breakout below the minor “descending triangle” range consolidation with pull-back resistance now at 16070 which also confluences now with the upper boundary of a short-term descending channel in place since 31 March 2016 high.
• Enroute towards our medium-term potential downside targets (supports) at 15750/600 and 15370 (please click on this link for details on how we define these targets as per highlighted in our latest weekly strategy/outlook published yesterday).
• The short-term (hourly) Stochastic oscillator is now fast approaching its extreme oversold level where a minor consolidation/rebound may occur at the 15750/600 support zone.

Key levels (1 to 3 days)

Pivot (key resistance): 16070

Supports: 16570/500 & 15370

Next resistance:  16300

Conclusion

We are maintaining our bearish bias for a potential direct drop scenario below the 16070 daily short-term pivotal resistance. The risk will be at the 15750/600 support zone where the Index may see a minor rebound/consolidation before another potential downleg towards the maximum medium-term downside target set at 15370.

However, a break above the 16070 short-term pivotal resistance is likely to invalidate the direct drop scenario to see a further push up/consolidation (not a change in the medium-term bearish trend) towards the next resistance at 16300.

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