nikkei 225 daily outlook tues 19 apr 2016 right below 16900 medium term resistance for a potential s

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has shrugged off the initial bearishness triggered by the failed Doha talks on oil production freeze between OPEC and non-OPEC nations. The Index has staged a recovery in the U.S. session and covered the 108 points gapped down seen in yesterday Asian morning session.

Key elements

• Despite the rally seen in the overnight U.S. session, the Index is still capped by the upper boundary of the potential “Symmetrical Triangle” range configuration in place since 15 March 2016 high at 16900 as per highlighted in our latest weekly outlook/strategy (click here for details) (see 4 hour chart).
• Short-term momentum indicators are indicating a potential exhaustion as the upside momentum of yesterday’s recovery appears overstretched. The 4 hour Stochastic oscillator has reached its extreme overbought level accompanied by a bearish divergence signal seen on the 1 hour Stochastic oscillator (similar occurrence seen on 14 April 2016 high @1pm at the upper boundary of the “Symmetrical Triangle” range before the price action pull-backed).
• On the short-term, the Index is now being supported by an intermediate ascending trendline from the 08 April 2016 low @2am now at 16500.

Key levels (1 to 3 days)

Pivot (key resistance): 16900 (weekly pivot)

Supports: 16500 & 16250

Next resistance: 17315

Conclusion

Yesterday’s rally seen in price action has led the Index back to its weekly pivotal resistance at 16900 (upper boundary of the “Symmetrical Triangle” range configuration) and failed to surpass it

Short-term technical elements have turned negative and as long as the 16900 pivotal resistance is not broken to the upside, the Index is likely to see at least a minor drop towards the 16500 trendline support. Only a break below 16500 may open up scope to see a further slide towards yesterday’s swing low area at 16250 in the first step.

However, a clearance above the 16900 weekly pivotal resistance is likely to invalidate the medium-term bearish view for a further rally towards the 152 March 2016 swing high area at 17315.

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