nikkei 225 daily outlook friday 19 feb 2016 15830800 is the support to watch now to maintain bullish

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225 futures) has given up a some of its prior gains as it staged a pull-back from yesterday, 18 February 2016 high of 16336 to print a current Asian session low of 15803 (-3.26%).

The current sell-off seen in Index is correlated to plunge seen in the USD/JPY as it crushed below the 113.00 support. The likely reason for the sudden JPY strength is caused by the AUD/JPY cross as short-term traders unwound long positions due to a talk down on the recent AUD strength by RBA (central bank) board member John Edwards.  He is quoted by media stating that “Aussie has found a base and I guess I would say I still think it is a bit too high” (click here).

Technically, the Index is still holding above our predefined short-term pivotal support at 15830. Please click on this link for a recap on our previous daily outlook/strategy.

Key elements

• Despite this morning sell-off in line with USD/JPY, the Index is still holding above the 15830 short-term pivotal support.
• Current price action suggests the Index has started to trade within a short-term range with its upper limit at 16340/500.
• The hourly (short-term) Stochastic oscillator has flashed a bullish divergence signal at its oversold region which suggests a potential turn around in price action as the current downside momentum is losing strength.

Key levels (1 to 3 days)

Pivot (key support): 15830/800

Resistances: 16340/500 & 16890

Next supports: 15280 & 14780

Conclusion

We are maintaining our bullish stance and as long as the 15830/800 short-term pivotal support holds, the Index is likely to see a push back up to retest the short-term range top at 16340/500.

However, a break below the 15830/800 pivotal support is likely to invalidate the push up scenario for a deep slide towards the next support at 15280 and even the 12 February 2016 swing low of 14780.

Disclaimer

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. City Index recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.