nikkei 225 daily outlook wed 09 sep potential recovery in progress above 17970 support 1247092015

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has staged the expected bullish breakout from the bullish ‘Descending Wedge” chart configuration and traded higher during the European and U.S. sessions.

Earlier this morning, 09 September 2015, it continued to surge and it is now coming close to our expected short-term target at 18470.

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

Key elements

• The Index has a bullish breakout from the “Descending Wedge” chart configuration which reinforces our recovery expectation for the Index.
• Based on the Elliot Wave Principal, the Index has started to shape a potential bullish impulsive 5- wave  structure from the 08 September 2015 low of 17370 @2pm. From a lower degree, the Index is now undergoing a wave iii within a typical wave 1 that consists of i,ii,iii,iv & v.
• The intermediate resistance at 18470 (our short-term target as per highlighted in yesterday’s daily outlook) also confluences with the minimum wave iii Fibonacci projection of 1.00. The next resistance stands 18850/18950 which coincides closely with the standard wave iii Fibonacci projection of 1.618.
• The hourly (short-term) Stochastic oscillator is coming close to its extreme overbought level which suggests that the Index may stage a pull-back at the 18470 intermediate resistance before resuming its upside movement.

Key levels (1 to 3 days)

Pivot (key support): 17970

Resistance: 18470 & 18850/18950

Next support: 17370

Conclusion

Recovery scenario remains intact for the Index. We remain bullish and any potential pull-back is likely to be held by the adjusted daily pivotal support at 17970 before another rally to target 18850/18950 next.

On the other hand, a break below the 17970 pivotal support is likely to negate the bullish tone to see a slide to retest yesterday’s swing low at 17370.

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