nikkei 225 18990 intermediate support vulnerable for a bearish breakdown 2687462017

Short-term Technical Outlook (Tues, 28 Feb 2017)

(Click to enlarge chart)

What happened earlier/yesterday

In today’s earlier Asian session (Tues, 28 Feb), the Japan 225 Index (proxy for the Nikkei 225 futures) has traded lower and broke below the former minor swing high area of 27 February 2017 at 19143 and the ascending trendline support from 27 February 2017 low of 18993.

Therefore, the probability of an initial expected short-term “final push up” has been reduced as per highlighted in our latest weekly technical outlook report published yesterday (click here for a recap).

Key technical elements

• At the final closing hour of the Japanese cash equities market today, the Index has broken below the minor ascending trendline support  from 27 February 2017 low (depicted in dotted pink) now turns pull-back resistance at 19200.
• Based on the Elliot Wave Principal and fractal analysis, the Index is now likely to be undergoing an impulsive bearish wave 3 of a minor degree in place from the minor swing high of 19486 printed on 21 February 2017. The potential end targets of the bearish wave 3 stands at 18880 and 18700.
• The hourly Stochastic oscillator has already reached its extreme oversold level which indicates that the Index may see an initial push up at this juncture before its medium-term downside movement resumes.
• The significant short-term resistance stands at 19290 which is defined by the descending trendline from 21 February 2017 high and a Fibonacci cluster.
• From an intermarket analysis perspective, the USD/JPY remains bearish below the 112.80/113.06 medium-term pivotal resistance which reinforces the potential bearish breakout scenario on the Nikkei 225.

Key levels (1 to 3 days)

Intermediate resistance: 19200

Pivot (key resistance): 19290

Supports: 18990, 18880 & 18700

Next resistance: 19490

Conclusion

The Index is now looking vulnerable for a potential bearish breakdown below the 18990 ascending trendline support from 17 January 2017 low. Given the sharp fall in the closing hour of the Japanese cash equities market today, the Index may see an initial short-term push up towards the 19200 intermediate resistance with a maximum limit set at the key short-term pivotal resistance of 19290 before another potential downleg materialises to target the next supports at 18880 and 18700 next.

However, a clearance above 19290 may put the bears in jeopardy to see a squeeze up towards the descending trendline resistance in place since 27 January 2017 high now at 19490.

Charts are from City Index Advantage TraderPro

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