nikkei 225 daily outlook wed 09 dec plummeted by now right above 19190 weekly pivotal support 178992

(Click to enlarge charts)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has plummeted lower and broke below the short-term (daily) pivotal support at 19385 in the European session.  Risk aversion has creeped back into the market due to a sell-off in the China’s yuan as the offshore USD/CNH spiked up towards the 6.49 level.

Key elements

• Current price action is now resting at the lower boundary of the ascending channel (in dark blue) in place since 29 September 2015 low now acting as a support at the 19290 level (see 4 hour & 1 hour charts).
• Current price action is also right below the weekly pivotal support of 19190 as per highlighted in our latest weekly outlook/strategy (click here for more details).
• The intermediate resistances to watch will be at 19460 (yesterday’s minor swing high ) and 19640 (trendline resistance linking the lower highs from 03 December 2015 + 50% Fibonacci retracement of the recent down move from 01 December 2015 high to yesterday’s 08 December 2015 low of 19239).
• The hourly (short-term) Stochastic oscillator has started to inch up from its oversold region which suggests that downside momentum of the current down move has started to wane.

Key levels (1 to 3 days)

Intermediate support: 19290

Pivot (key support): 19190 (weekly pivot)

Resistance: 19460 & 19640

Next support: 19000

Conclusion

Despite yesterday’s plunge in price action, we are not validating the start of a medium-term bearish trend as the Index has continued to hold above the weekly pivotal support at 19190. As long as the 19190 key medium-term support holds, the Index may see a short-term recovery to test 19460 in the first instance follow by next resistance at 19640.

On the other hand, a clear break (daily close) below the 19190 weekly pivotal support is likely to damage the medium-term bullish trend to see a deeper decline to target the next support at 19000 in the first step.

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