Featured Trade Minor pull back in progress for Nikkei 225
Nikkei 225 undergoing minor pull-back.
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Short-term technical outlook on Nikkei/Japan 225 Index (Thurs 18 Apr)
Key technical elements
- The recent rally 3.7% seen in the Japan 225 (proxy for Nikkei 225) from its 10 Apr 2019 low of 21550 has hit a minor ascending channel resistance at 22350 and broke below yesterday 17 Apr Asian session low of 22185.
- Short-term momentum reading has turned negative as the 4-hour Stochastic oscillator has inched downwards after a prior bearish divergence signal at its extreme overbought level.
- The next significant support rests at 21970/21880 which is defined by the lower boundary of minor ascending channel from 25 Mar 2019 low, 23.6% Fibonacci retracement of the recent up move from 25 Mar 2019 low to 17 Apr 2019 high & the medium-term pivotal support as per highlighted in our weekly technical outlook report published on Mon; click here for a recap.
Key Levels (1 to 3 days)
Intermediate resistance: 22230
Pivot (key resistance): 22350
Support:21970/21880
Next resistance: 22880
Conclusion
Given that the 1-hour Stochastic oscillator has reached an extreme oversold level, the Index may shape a bounce first toward the 22230 intermediate resistance with a maximum limit set at the 22350 key short-term pivotal resistance. Thereafter, another round of potential push down to target the 21970/21880 support in order to complete the minor pull-back phase.
On the other hand, an hourly close above 22350 invalidates the further pull-back scenario for a continuation of the up move towards the next resistance at 22880 (16 Oct/03 Dec2018 medium-term swing high area).
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