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Short-term technical outlook on Nikkei 225 (Thurs, 21 Sep 2017)

Key technical elements

• The Japan 225 Index (proxy for the Nikkei 225 futures)has managed to stage a bullish breakout above the former20300 range resistance of June 2017. In addition, the daily RSI oscillator has not flash any bearish divergence signal yet and still has further potential to manoeuvre to the upside before it reaches an extreme overbought level of 80% (see daily chart).
•  The hourly Stochastic oscillator has just exited from its oversold region which indicates that medium to short-term upside momentum of price action remains intact.
• The key short-term support rests at 20320/270 which is defined by the lower boundary of the minor ascending channel in place since 08 September 2017 low, the former minor swing high areas of 19/20 September 2017 and the 23.6% Fibonacci retracement of the up move from 15 September 2017 minor swing low to today’s current intraday high of 20510 (see 1 hour chart).
• The significant short-term resistance stands at 20610/630 which is defined by the upper boundary of the minor ascending channel in place since 08 September 2017 low and Fibonacci projection cluster (see 1 hour chart).
• Based on intermarket analysis, the USD/JPY has a direct correlation with the movement of Nikkei 225. The USD/JPY has continued to evolve in a bullish configuration within its on-going short-term uptrend from 08 September 2017 low, holding above the 111.80 key short-term support.  Therefore, a further potential up move in USD/JPY should translate into a similar positive movement in the Nikkei 225.

Key Levels (1 to 3 days)

Pivot (key support): 20320/270

Resistance: 20610/630

Next support: 19900 (medium-term pivot)

Conclusion

The short-term uptrend of the Index remains intact and as long as the 20320/270 short-term pivotal support holds, the Index is likely to shape another potential upleg to target the next intermediate resistance at 20610/630.

On the other hand, failure to hold above 20320/270 may negate the bullish tone to trigger a further corrective decline towards the 19900 medium-term pivotal support (also defined by the pull-back support of a former descending trendline from 20 Jun 2017).

Charts are from City Index Advantage TraderPro

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