nikkei 225 daily outlook tues 23 feb 2016 turning toppish below 16500 1798362016

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has staged a rally yesterday and hit a high of 16347 in this morning, 23 February 2016 Asian session.

Key elements

• Our latest weekly technical outlook/strategy published yesterday, we have warned that the Index is now coming to the tail end of the first phase of the countertrend rally that started from 12 February 2016 low (click here for a recap). Today’s price action has almost reached the 16500 resistance with a current high of 16347. In addition, the Index has now traced out an impending bearish “Triple Top” configuration with its neckline support at 15700.
• The hourly (short-term) Stochastic oscillator is showing that downside momentum has resurfaced and still has some room before reaching its extreme oversold level.

Key levels (1 to 3 days)

Pivot (key resistance): 16500

Support: 15700

Next resistance: 16890

Conclusion

Current technical elements are in favour now towards short-term bears as the first phase countertrend rally in place since 12 February 2016 low is likely to have topped out below the 16500 resistance. Expect a potential drop in first step towards the neckline support of the bearish “Triple Top” configuration at 15700.

On the flipside, a clearance above the 16500 short-term pivotal resistance is likely to see a residual upside movement to target the next resistance at 16890 (close to the upper boundary of the bearish descending channel in place since 18 December 2015 high.

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