nikkei 225 daily outlook tues 19 jan 2016 potential last push down below 17200 before snap back 1793

(Click to enlarge charts)

Key elements

• The short-term downtrend for the Japan 225 (proxy for the Nikkei 225) in place since 30 December 2015 remains intact below 17200 key short-term resistance which is defined by the 23.6% Fibonacci retracement from 30 December 2015 high to 16 January 2016 low.
• The hourly (short-term) Stochastic oscillator has just exited from its overbought region which suggests that yesterday’s push up in price action has been exhausted and the Index should resume its downside movement.
• The support rests at 16500 as per defined by a Fibonacci projection cluster for a potential bearish impulsive wave 3/ target.

Key levels (1 to 3 days)

Pivot (key resistance): 17200

Support: 16500

Next resistance: 17740/840

Conclusion

The “dust” has settled after the release of the key Chinese data such as Q4 GDP, Industrial Production and Retail Sales. As long as the 17200 short-term pivotal resistance is not surpassed, the Index is likely to shape a last push down to target the 16500 support before mean reversion/snap-back in price action occurs.

On the other, a break above the 17200 pivotal resistance is likely to see the start of the mean reversion process for a squeeze up towards the next resistance at 17740/840 (please click link for more details as per highlighted in our latest weekly outlook/strategy).

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