nikkei 225 weekly outlook for 03 aug to 07 aug bullish bias remains intact above key 2038020050 supp

(Click to enlarge charts)

What happened earlier

The Japan 225 (proxy for the Nikkei 225) has shaped the expected pull-back below the predefined 20850/20960 risk zone before inching higher last week.

Please click on this link for more details on our last weekly outlook.

Key elements

• The 50-day Moving Average (in blue) continues to act as a support for the Index at around 20050 (see daily chart).
• The intermediate term RSI oscillator remains above its trendline support which suggests that upside momentum remains intact (see daily chart).
• The 20050 support also coincides closely with the 50% Fibonacci retracement of the up move from 09 July 2015 low @8am to the 21 July 2015 high @12pm (see 4 hour chart).
• On the shorter-term, the Index has started to evolve within an ascending channel (in brown) in place since 09 July 2015 low. Interestingly, current price action has managed to hold above the lower boundary (support) of the ascending channel at 20380 (see 4 hour chart).
• The 20850/20960 June 2015 swing high also confluences with multiple Fibonacci projection clusters from various degrees (see daily chart).
• The next significant resistance will be at 21360/21400 which is defined by the 1.00 Fibonacci projection from 14 April 2014 low @8am to 16 January 2015 low @8am and the 0.764 Fibonacci projection from 09 July 2015 low @8am to 27 July 2015 low @8pm (see daily & 4 hour charts).

Key levels (1 to 3 weeks)

Intermediate support: 20380

Pivot (key support): 20050

Resistance: 20850/20960 & 21360/21400

Next support: 19030/19000

Conclusion

Current technical elements remain positive. As long as the 20380 intermediate support holds, the Index is likely to shape a push up to test the 20850/20960 June 2015 swing high before staging a potential rally to target the next significant resistance at 21360/21400.

On the other hand, a break below the 20050 key pivotal support is likely to damage the expected multi-week bullish movement for a deeper slide to test the next support at 19030/19000 (also the 200-day Moving Average).

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