Featured Trade Ascending Wedge bearish breakdown in Nikkei 225

Short-term technical outlook on Japan 225 (Tues, 29 Jan)

Key technical elements

• The Japan 225 Index (proxy for the Nikkei 225 futures) has staged a bearish breakdown below the lower boundary/support of the minor  “Ascending Wedge” bearish range configuration in place since the 26 Dec 2018 low in yesterday, 28 Jan 2019 U.S. session reinforced by weaker than expected earnings releases from Caterpillar and Nvidia (bellwether stocks that are highly dependent on the health of the global economy) (see 4 hour chart).
• This observation suggests that the on-going rebound of 10% in place since the 26 Dec 2018 may have formed a top at 20960 on 18 Jan 2019, U.S. session. In the shorter-term (intraday), the Index may shape a minor pull-back first towards the intermediate resistance at 20600 (yesterday, 28 Jan U.S. session minor swing high) as the hourly Stochastic oscillator has now dipped into the oversold region.
• Key short-term resistance stands at 20680 which is defined by the pull-back resistance of the former “Ascending Wedge” range support and the 61.8% Fibonacci retracement of the yesterday’s slide from 20915 high to today, 29 Jan Asians session current intraday low of 20477.
• Near-term supports rest at 20200 (the medium-term downside trigger, click here for a recap on latest weekly technical outlook and 20000 (minor swing low areas of 07/14 Jan 2019 & close to 50% of Fibonacci retracement of the rebound from 26 Dec 2018 low to 18 Jan 2019 high).

Key Levels (1 to 3 days)

Intermediate resistance: 20600

Pivot (key resistance): 20680

Supports: 20200 & 20000

Next resistance:21020 (medium-term pivot)

Conclusion

If the key short-term pivotal resistance at 20680 manages to hold the minor rebound, the Index is likely to stage another potential downleg to target the 20200 medium-term downside trigger level and a break below it exposes the next support at 20000.

However, a clearance above 20680 put the bears on hold for a squeeze up towards the medium-term pivotal resistance at 21020.

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