nikkei 225 daily outlook tues 06 oct risk of a short term pull back 1497332015

(Click to enlarge chart) Key elements The Japan 225 (proxy for the Nikkei 225) has staged a bullish breakout above its “Descending Wedge” chart formation. […]

(Click to enlarge chart)

Key elements

The Japan 225 (proxy for the Nikkei 225) has staged a bullish breakout above its “Descending Wedge” chart formation.
After a steep up move seen yesterday, the Index may see a pull-back at this juncture. The hourly (short-term) RSI oscillator has turned down from its overbought level which still has some room for further potential downside before reaching its trendline support.
The short-term significant support to watch will be at 17980/17850 which is defined by the 38.2%/50% Fibonacci retracement of the most recent up move from 02 Oct 2015 low to 06 Oct 2015 high and also close to the pull-back support of the “Descending Wedge” bullish breakout.

Key levels (1 to 3 days)

Pivot (key resistance): 18425

Support: 17980/17850

Next resistance: 18740

Conclusion

As long as the 18425 daily pivotal resistance is not surpassed, the Index may see a pull-back towards the 17980/17850 support.

However, a break above the 18425 pivotal resistance is likely to see the continuation of the upside movement to target the next resistance at 18740 in first step.

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