nikkei 225 maintain bullish bias above 16150 support 1825112016

Daily Outlook, Friday 05 Aug 2016

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225) has push up as expected from the 16000 pivotal support and al hit the first target/resistance zone of 16320/400 (printed a high of 16360 in today’s early Asian session, 05 August).

Please click on this link for a recap on our previous daily short-term technical outlook/strategy.

Today key Japan economic data/releases will be as follow:

• Coincident Index for Jun (preliminary) @0500GMT (111.3 consensus)
• Leading Economic Index for Jun (preliminary) @0500GMT (99.7 consensus)

Key elements

• The Index has surpassed a minor descending trendline in place since 01 August 2016 high now turns into a pull-back support (depicted in dotted green) at 16150 which also confluences close with the 50% Fibonacci retracement of the recent up move from 04 August 2016 low to today’s current intraday high of 16360.
• The significant short-term resistance now stands at 16540 which is defined by the descending trendline (depicted in pink) in place since 21 July 2016 high and the 61.8% Fibonacci retracement of the current decline from 21 July 2016 high to yesterday’s low of 15915.
•  The 4 hour Stochastic oscillator is hovering at the overbought region but it has not reached an extreme overbought level. In addition, the shorter-term 1 hour Stochastic oscillator has dipped down and it is coming close to its oversold region. These observations suggest that upside momentum of price action remains intact at least in the short-term.

Key levels (1 to 3 days)

Pivot (key support): 16150

Resistances: 16540 & 16780

Next support: 16000

Conclusion

Maintain bullish stance with a tightened pivotal support.  As long as the 16150 daily short-term pivotal support holds, the Index may see a further push up to test the next resistance at 16540 and a break above 16540 is likely to propel the index higher towards 16780 (the minor swing high area of 27 July 2016 – formed before the last BOJ’s monetary meeting).

On the other hand, failure to hold above the 16150 short-term pivotal support is likely to negate the preferred bullish tone for another round of decline to retest the significant support at 16000 (this week’s swing low).

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