![Japan Index (4 hour)_11 May 2016](/en-sg/-/media/research/cityindex/images-au-sg/2017/06/japaninde4hour11may2016530233.png)
(Click to enlarge charts)
What happened earlier/yesterday
The Japan 225 Index (proxy for the Nikkei 225 futures) has continued its push up to challenge the 16720 medium-term pivotal resistance but today’s price action has managed to stage a retreat without a clear bullish breakout.
Please click on this link for a recap on our previous daily short-term outlook/strategy.
Key elements
- The 4 hour Stochastic oscillator has just exited from its overbought region which suggests that the current upside momentum is being “overstretched” where price action may stage a decline at this juncture (below the 16720 medium-term pivotal resistance).
- The near-term support rests at 16550 which is minor pull-back support of the former trendline resistance (in dotted green) that has been broken above yesterday (see 4 hour chart).
- The next support stands at pull-back support of the minor rectangle range bullish breakout at 16200.
Key levels (1 to 3 days)
Pivot (key resistance): 16720/810
Support: 16550 & 16200
Next resistance: 17240
Conclusion
We maintain our bearish bias and tolerate the excess to 16810 and a break below the first short-term support at 16550 is likely to add impetus for decline to retest the 16200 level in the first step.
On the flipside, a break above the 16720/810 pivotal resistance is likely to invalidate the medium-term bearish view for a further push up target the next resistance at 17240.
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