nikkei 225 daily outlook tues 08 sep bottoming out with bullish descending wedge 1239452015

(Click to enlarge chart)

Key elements

• Despite a weak performance by the Nikkei 255 (cash) at its closing today, 08 September 2015 where it shed 433 points (-2.4%), technical elements have turned positive.
• Since the high on 29 August 2015 @12am, the Japan 225 (proxy for the Nikkei 225) has traced out an impending bullish “Descending Wedge” (highlighted by orange lines) chart formation with its lower(support) boundary at 17370.
• The “Descending Wedge” chart formation is considered as bullish as we can see that the magnitude of the “lower lows” is lesser (less steep) than the magnitude of the “lower highs” which indicates that downside momentum has started to abate.
• Based on the Elliot Wave Principal, a typical of “Descending Wedge” evolves into 5 waves (a,b,c,d,e). Current price action of the Index has finished the final downleg movement of the e wave which suggests that the “Descending Wedge” has completed its form and a potential bullish reversal should follow next.
• The upper (resistance) boundary of the “Descending Wedge” stands close to 18010 which is the upper limit of the weekly neutrality zone as per highlighted in our latest weekly outlook (please click here for more details).

Key levels (1 to 3 days)

Pivot (key support): 17370

Resistance: 18010 & 18470

Next support: 17160

Conclusion

Technical elements have turned positive and a break above the 18010 intermediate resistance (upper boundary of the “Descending Wedge” is likely to reinforce a further recovery to target 18470 in first step.

On the contrary, failure to hold above the 17370 daily pivotal support may invalidate the recovery scenario for a further decline to retest the “Black Monday”, 24 August 2015 low at 17160.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.