nikkei 225 daily outlook fri 11 dec right below 19290 resistance to resume its potential downside mo

(Click to enlarge charts)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has traded sideways throughout yesterday but managed to inch higher in today’s morning session.

Pleas click on this link for a recap on our previous daily outlook.

Key elements

• Current price action has rallied and now right below the 19290 daily (short-term) pivotal resistance as per highlighted in yesterday’s daily outlook/strategy. Interestingly, the magnitude of the current rise seen from Thursday, 10 December 2015 low stands at 2.23% which is similar from the earlier rise seen on 04 December 2015 low @10pm to 07 December 2015 high @10am before the Index collapsed.
• The 19290 short-term pivotal short resistance also confluences with the 38.2% Fibonacci retracement of the down move from 07 December 2015 high @10am to 10 December 2015 low
• The daily (medium-term) RSI oscillator remains bearish below their former supports now turn pull-back resistances (in dotted red). In addition, the hourly (short-term) Stochastic has reached its extreme overbought region. These observations suggest that downside momentum remains intact and the Index is now at a potential turning point for a slide in price action.
• The short-term support rests at 18770 which is defined by the 1.618 Fibonacci projection of the down move from 01 December 2015 high to 04 December 2015 low @9pm projected from 07 December 2015 high @12pm.

Key levels (1 to 3 days)

Pivot (key resistance): 19290

Support: 18770 & 18650

Next resistance: 19470/19590

Conclusion

As long as the 19290 daily (short-term) pivotal resistance is not surpassed, the Index still faces the risk of a further potential decline to target the 18770 support andwith a maximum limit set at the 18650 level (pull-back support area of the prior “Inverse Head & Shoulders” bullish breakout).

On the other hand, a break above the 19290 pivotal resistance may invalidate the bearish scenario to see a squeeze up towards the next resistance at 19470/19590 zone.

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