Short-term technical outlook on Japan 225 Index (Thurs, 17 May)
Key technical elements
- Since its 23 Mar 2018 low of 20328, the Japan 225 Index (proxy for the Nikkei 225 futures) has started to evolve into a medium-term uptrend within the longer-term primary uptrend in place since June 2016 supported by the recent bullish breakout of the 22710 level (former congestion area of 15/29 Dec 2017 & the 61.8% Fibonacci retracement of the recent steep decline from 23 Jan high to 23 Mar 2018 low) (see 1st chart).
- The daily RSI oscillator remains positive above its corresponding 1st support at the 62% level without any bearish divergence signal. These observations suggest the medium-term upside momentum of price action remains intact.
- In the shorter-term, the Index has been evolving in a minor ascending channel in place since 03 May 2018 low of 22088 with its lower boundary now acting as support at 22770 which also coincides with the former minor swing high area of 16 May 2017 (see 2nd chart).
- The significant key short-term resistances stand at 23000 (psychological) followed by 23100 (upper boundary of the minor ascending channel as depicted on the 1 hour chart, Fibonacci projection cluster & the former minor swing low areas of 31 Jan/02 Feb 2018).
- The hourly Stochastic oscillator has started to inch upwards.
- Based on intermarket analysis, the movement of Nikkei 225 tends to have a direct correlation with the USD/JPY. The medium-term technical analysis on the USD/JPY still favours the bullish camp holding above the 108.60 key medium-term support for another potential upleg to target 110.85/110.00 in first step follow by the major resistance of 112.00/112.30.
Key Levels (1 to 3 days)
Pivot (key support): 22770
Resistances: 22900, 23000 & 23100
Next support: 22700/620
Conclusion
Therefore as long as the 22770 key short-term pivotal support holds, the Japan 225 Index (proxy for the Nikkei 225 futures) is likely to stage another round of potential impulsive upleg to retest its recent 15 May minor swing of 22900 before targeting the next resistances at 23000 follow by 23100 next.
However, failure to hold at 22770 negates the bullish tone for a deeper pull-back to retest the 22700/620 support (former minor swing high area of 30 Apr 2018 that was retested yesterday, 16 May before it staged a bounce + 23.6% Fibonacci retracement of the on-going minor up move from 03 May low to 15 May 2018 high).
Charts are from City Index Advantage TraderPro & eSignal
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