nikkei 225 short term technical outlook potential push up towards 17500 1837162016

Tues, 08 Nov 2016

(Click to enlarge chart)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has shaped a pull-back in this morning, 08 November 2016 Asian session after the expected up move that occurred yesterday from the 16960 medium-term pivotal support with excess tolerated to 16800.

Key elements

• Last week’s decline from the 17520 high printed on 01 November 2016 to last Friday, 04 November 2016 low of 16803 can be considered the potential end of the minor term corrective wave 4/ based on the Elliot Wave Principal and fractal analysis. Therefore, yesterday’s up move is likely to be considered as the start of a potential minor term bullish impulsive wave 5/ which advocates further upside potential for the Index.
• Intermarket analysis from the USD/JPY also supports further potential upside movement in the Japan 225 Index as the USD/JPY tends to move in direct correlation with the Nikkei 225 due to the risk appetite factor. A bullish USD/JPY represents risk-on (risk appetite improves) which usually coincides with a bullish movement seen in equities (Nikkei 225) and the reverse occurs when a bearish USD/JPY represents risk-off (risk appetite wanes). At this juncture based on technical analysis perspective, the USD/JPY remains bullish in the short-term as long as the 103.50 key short-term pivotal support holds.
• Intermediate support for the Index stands at 17060/50 as per defined by the yesterday’s gapped up and the 50% Fibonacci retracement of the yesterday’s up move from last Friday low of 16803.
• The hourly Stochastic oscillator has already dipped into its oversold region which suggests that a potential up move is likely to occur soon at this juncture.
• The medium-term upside trigger level stands at 16500 (please click on this link for more details as per highlighted in our latest weekly technical outlook published yesterday).

Key levels (1 to 3 days)

Intermediate support: 17060/50

Pivot (key support): 16960/800

Resistance: 16500 (medium-term upside trigger)

Next support: 16340

Conclusion

Maintain bullish bias in short-term but do expect a potential minor dip first towards 17060/50 before another upleg materialises to target 16500.

However, failure to hold above the 16960/800 medium-term pivotal support is likely to invalidate the preferred bullish scenario to open up scope for a deeper decline towards the next support at 16340 (the swing lows area of 26 August, 15 September and 27 September 2016) in the first step.

Charts are from City Index Advantage TraderPro

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