nikkei 225 daily outlook tues 14 june 2016 risk of minor rebound towards 16120300 before another pot

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has continued to inch lower and challenged the lower boundary of the ascending range at 16050 where we are expecting the a potential minor rebound/consolidation around that aforesaid juncture before another downleg materialises.

Please click on this link to recap the details as per highlighted in our latest weekly technical outlook/strategy published yesterday.

Today key Japan economic data releases as follow;

• Industrial Production for Apr @0430 GMT

 Key elements

• Both the 4 and 1 hour Stochastic oscillator has dipped into their respective extreme oversold levels. In addition, the 1 hour Stochastic oscillator has flashed a bullish divergence signal and still has room to manoeuvre to the upside before reaching an extreme overbought level. These observations suggest that the short-term downside momentum of the decline in place since last Friday, 10 June 2016 has started to wane and the Index faces the risk of a minor rebound/consolidation at this juncture.
• Short-term intermediate resistance now stands at 16120 which is defined by yesterday’s minor swing high area. Short-term key pivotal resistance will be at 16300 which is defined by a confluence of elements (the minor swing lows area of 13 May/04 June 2016 and the 50% Fibonacci retracement of last Friday’s decline from 10 May 2016 high of 16698 @7am to today’s current intraday low – see 4 hour chart).
• Short-term support now rests at 15830 which is the swing lows area of 30 April to 04 May 2016 (see 4 hour chart) follow by 15600 (1.236 Fibonacci projection and the minor swing low area of 11 April 2016 @8am.

Key levels (1 to 3 days)

Intermediate resistance: 16120

Pivot (key resistance): 16300

Supports: 15830 & 15600

Next resistance: 16500

Conclusion

The Index has hit the first short-term support at 15830.  With reference to the above mentioned observations seen in the 1 hour and 4 hour Stochastic oscillators and the Elliot Wave Principal, the Index now faces the risk of a minor rebound/ consolidation towards the intermediate resistance at 16120 with a maximum limit set at the 16300 daily short-term pivotal resistance before another downleg materialises to target the next support at 15600 in the first step.

However, a break above the 16300 short-term pivotal resistance is likely to negate the bearish tone for a further snap-rally towards the next resistance at 16500.

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