nikkei 225 daily outlook wed 01 june 2016 further potential push up above 16990 support 1813792016

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has drifted lower in the overnight U.S. session and printed a low of 17005 which is just above predefined lower limit of the short-term neutrality range at 16990.

Please click on this link to recap our previous daily short-term outlook/strategy.

Key elements

• Price action has drifted down and staged a rebound from the lower boundary of the short-term ascending channel in place since 24 May 2016 low @1pm which also confluences with the significant short-term support at 16990 as highlighted in our yesterday’s daily short-term outlook/strategy.
• The upper boundary (resistance) of the aforementioned ascending channel stands at 17480 which also confluences with the 0.618 Fibonacci projection of the up move from 24 May 2016 low @1pm to 31 May 2016 high projected from yesterday U.S. session low of 17005.
• The hourly (short) RSI oscillator has staged a rebound above its ascending trendline and surpassed the 50% neutrality level. In addition, it still has room to manoeuvre to the upside before reaching an extreme overbought level. These observations suggest a revival in short-term upside momentum of price action.

Key levels (1 to 3 days)

Pivot (key support): 16990

Resistances: 17300 & 17480

Next support: 16740 (weekly pivot)

Conclusion

Start of a potential last upleg of the corrective rally in place since 12 February 2016 low. As long as the 16990 daily short-term pivotal support holds, the Index is likely to see a further upside movement to target 17300 before 17480.

However, a break below the 16990 short-term pivotal support may negate the bullish tone to see a further slide to test the 16740 medium-term pivotal support set for this week.

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