nikkei 225 daily outlook tues 12 jan 2016 further drop before potential recovery above 1715016900 su

(Click to enlarge charts)

Key elements

• The Japan 225 (proxy for the Nikkei 225) is now hovering above its key long-term support at 16900 (see daily chart & click link here for more details as per highlighted in our latest weekly strategy/outlook).
• On the short-term, the Index is still being capped by the upper boundary (resistance) of a descending channel at 17570 (see hourly chart).
• The hourly (short-term) Stochastic oscillator is still oriented to the downside and still has some room left before reaching its extreme oversold level. This observation suggests that the price action of the Index may shape a further dip down.

Key levels (1 to 3 days)

Intermediate support: 17150

Pivot (key support): 16900

Resistance: 17570 & 17840

Next support: 16300

Conclusion

The Index is likely to shape a push down towards the 17150 intermediate support with a maximum limit set at the 16900 pivot before a potential recovery occurs to retest 17570 before target the next resistance at 17840.

On the flipside, a break below the 16900 pivotal support is likely to put the long-term bullish trend in place since March 2009 in jeopardy as the Index may shaped a deeper correction with its potential short-term downside target at 16300.

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