nikkei 225 daily outlook wed 09 mar 2016 still holding above 16500310 key support for potential fina

(Click to enlarge charts)

What happened yesterday/earlier

The 1.8% rally from the low of 16569 seen in the Japan 225 (proxy for the Nikkei 225 futures) in yesterday Asian session has appeared to be short lived as the Index has failed to maintain the upside momentum during the European and U.S. sessions.

Despite the pull-back seen in its price action, the Index is still trading above the 16500/310 key pivotal support as per highlighted on our latest weekly outlook. Please click on this link for a recap on our previous daily outlook/strategy.

Key elements

• The current pull-back in price action from last Friday high of 17176 is now right at the upper limit of the pivotal support at 16500. Interestingly, the magnitude of the on-going pull-back is 4% which is almost similar to the previous pull-back (length of wave 2 from 27 February 2016 high of 16536 to 01 March 2016 low of 15857) at 4.1%.
• The current pull-back is also now resting at the lower boundary of the bullish ascending channel in place since the start of the countertrend rally from 12 February 2016 low of 14782 and also coincides closely with the 50% Fibonacci retracement of the up move from 01 March 2016 low of 15854 @10am to 05 March 2016 high of 17176 @2am, a typical end target of a corrective wave 4 pull-back from the Elliot Wave Principal.
• The 4 hour Stochastic oscillator has now flashed a bullish divergence signal at its oversold region which suggests that the downside momentum of the current decline from last Friday high is waning and potential upside reversal may occur at this juncture.

Key levels (1 to 3 days)

Intermediate support: 16500

Pivot (key support): 16310

Resistance: 17100/220

Next support: 15600

Conclusion

Despite yesterday’s lacklustre price action seen in the Index, our bullish bias remains unchanged as the Index is still trading above the 16500/6310 key support zone and technical elements remain positive. As long as the 16500/310 key support zone holds, the Index is likely to shape a potential recovery to target the 17100/220 resistance (last Friday, 04 March 2016 swing high area) in the first step.

However, a break below the 16310 pivotal support is likely to invalidate the final upleg scenario to trigger a deeper decline towards the next support at 15600 (24 February 2016 swing low area).

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.