nikkei 225 daily outlook wed 07 oct maintain short term push down scenario below 1830018425 resistan

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has retraced lower from the minor swing high of 18425 seen yesterday, 06 October 2015 during the Asian trading hours before trading sideways throughout the  European and U.S. sessions as the market awaits for the latest Bank of Japan (BOJ)’s monetary policy announcement due later today, 07 October 2015.

Please click on this link for a recap on our previous daily outlook.

Key elements

• The short-term significant support to watch stands at 17980/17850 which is closed to the pull-back support of the “Descending Wedge” bullish breakout (click here for more details as per highlighted in the updated weekly outlook) and the 38.2%/50% Fibonacci retracement of the most recent up move from 02 October 2015 low @9pm to 06 October 2015 high @2am.
• Based on the Elliot Wave Principal and the aforementioned Fibonacci retracement relationships, the Index appears to be undergoing a corrective (down) wave 4 within a larger bullish (impulsive) five wave structure from the 29 September 2015 low @1pm.
• The hourly (short-term) Stochastic oscillator continues to inch upwards from its oversold region and still has some room left for further potential upside before reaching its extreme overbought level. This observation suggests the risk of a residual push in price action to test yesterday’s U.S. session high of 18302.

Key levels (1 to 3 days)

Intermediate resistance: 18300

Pivot (key resistance): 18425

Support: 17980/17850

Next resistance: 18740

Conclusion

We continue to maintain our initial expectation of a potential short-term corrective push down to at least test the 17980/17850 support as long as the 18425 daily (short-term) pivotal resistance is not surpassed.

On the flipside, a clearance above the 18425 pivotal resistance is likely to invalidate the “push down” scenario to see the continuation of the upside movement to target the next resistance at 18740 in the first step.

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