(Click to enlarge chart)
- Earlier this morning, the Japan 225 (proxy for the Nikkei 225) has rallied and banged into its short-term trendline resistance linking the highs since 10 September 2015 @5pm at 18320.
- The hourly (short-term) Stochastic has reached its extreme overbought level which suggests the risk of a pull-back in price action of the Index after the earlier swift upside movement.
- The short-term support at 18000 confluences with the 76.4% Fibonacci retracement of this swift up move from 15 September 2015 low @12 am to the current 15 September 2015 high @8am.
- Japan central bank, BOJ monetary policy meeting today where interest rate decision will be out at 0300 GMT (11am, Singapore time). Market consensus is expected a no change in the policy overnight rate at 0.1%.
- More emphasis on the BOJ’s governor, Kuroda’s press conference to see whether there will be a signal to expand its current monetary stimulus in the near future in light of the recent weaker than expected economic data such as CPI, household spending and industrial production
Key levels (1 to 3 days)
Pivot (key support): 18000
Resistance: 18320 & 18740
Next support: 17710 (weekly pivot)
Do expect an increase in volatility due to BOJ press conference on the direction on its future monetary policy. Technically, we do expect a potential pull-back below the 18320 intermediate resistance but not beyond the 18000 daily (short) pivotal support before a new potential rise occurs to target the 18740 resistance.
On the other hand, a break below the 18000 daily pivotal support may see a deeper slide towards the 17710 weekly pivotal support.
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