nikkei 225 weekly outlook 16 nov to 20 nov 1919018950 key support for medium term upside movement to

(Click to enlarge charts)

What happened last week

The Japan 225 (proxy for the Nikkei 225) has failed to shaped the “last push up” towards 20050/20190 and tumbled straight towards the first expected downside target of 19190 (printed a low of 19236 in this morning session, 16 November 2015 as the market digested the aftermath of last Friday’s terrorist attacks in Paris.

Please click on this link for a review on our prior weekly technical strategy/outlook.

 Key Economic Data Release/Events

• 18 Nov (Wed) – Exports/Imports for Oct @2350GMT
• 19 Nov (Thurs) – BoJ Interest Rate Decision @0300 GMT
• 19 Nov (Thurs) – BoJ Press Conference (timing is not confirmed)
• 19 Nov (Thurs) – All Industry Activity Index for Sep @0430GMT

Key elements

• Current price action of the Index is now resting close to the lower limit (support) of the medium-term bullish ascending channel (in dark blue) now at 19190  in place since 29 September 2015 low (see daily & 4 hour charts).
• The daily (medium-term) RSI oscillator has inched down and it is now hovering just right above its supports which suggest limited downside potential in price action as the downside momentum of the current down move from 11 November 2015 high has started to dissipate (see daily chart).
• The medium-term key support zone are at 19190/18950 which also confluences with the 23.6% and 38.2% Fibonacci retracements of the up move from 15 October 2015 low @12am to 11 November 2015 high (see 4 hour chart).
• The medium-term key resistance zone remains at 20050/20190 which is defined by the exit potential of the “Inverse Head & Shoulders” bullish breakout stand and a Fibonacci cluster (1.618 Fibonacci projection from 29 September 2015 low to 07 October 2015 high projected from 14 October 2015 low + 76.4% Fibonacci retracement of the steep down move from 24 June 2015 high to 29 September 2015 low (see daily chart).
• In terms of the Elliot Wave Principal, the Index is in the midst of undergoing the corrective (bearish) wave 4/ of the impulsive wave structure that started in 29 September 2015 low  with possible targets at the 19190/18950 support zone as per aforementioned. Thereafter, it is likely to resume its medium-term upside movement as the bullish wave 5/ unfolds next.
• The Nikkei 225 has continued to outperform its major counterparts (S&P 500, DAX, HSI & China A50) as its current pull-back has managed to shed only 2.8% from the 11 November 2015 high.

Key levels (1 to 3 weeks)

Intermediate support: 19190

Pivot (key support): 18950

Resistance: 19630 & 20050/20190

Next support: 18650/18400

Conclusion

The corrective wave structure of 4/ that started from 11 November2015 high still shows the potential of a final down leg below the 19630 intermediate resistance to test the 19190 intermediate support with a maximum limit set at the 18950 weekly pivotal support. Thereafter, the medium-term upside movement is likely to resume to target the next resistance at 20050/20190 in the first step.

On the flipside, a break below the 18950 weekly pivotal support may damage the expected bullish tone to see a deeper slide to retest the 18650/18400 pull-back support area of the “Inverse Head & Shoulders” bullish breakout.

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