nikkei 225 daily outlook thurs 10 sep potential bullish reversal above 17970 support 1257662015

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has continued to surge during the Asian trading session but pull-backed as expected during the European and U.S. sessions.

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

Key elements

• The Index has retraced close to 50% (Fibonacci)  of its recent gain seem from the 17374 low printed on 08 September 2015 @2pm to yesterday’s (09 September 2015)  high of 18742 @2pm. This 50% Fibonacci retracement also confluences with the 17970 former resistance (congestion seen from 07 to 8 September 2015) now turns pull-back support.
• The 17970 is our daily pivotal support as per highlighted in our previous daily outlook report. Interestingly, the Index has just formed an hourly bullish “Hammer” candlestick pattern at the 17970 support which indicates that the recent pull-back is likely to have run its course and potential bullish reversal is round the corner.
• The hourly (short-term) RSI oscillator has just rebounded from its trendline support which suggests that upside momentum has resurfaced.
• The significant resistance to watch will be at 19190 which is the neckline of bullish “Double Bottom” chart configuration. A break above this 19190 level will allow the bulls to strengthen its cause to resume the medium term (1 to 3 weeks) uptrend (please click on this link for more details as per highlighted in our latest weekly outlook).

Key levels (1 to 3 days)

Pivot (key support): 17970

Resistance: 18950 & 19190

Next support: 17370

Conclusion

As long as the 17970 daily pivotal support holds, the Index is likely to resume its upside movement to target the 18950 resistance with a maximum limit set at the 19190 neckline resistance of the “Double Bottom”.

However, a break below the 17970 pivotal support is likely to negate the bullish tone to see a slide to retest 08 September 2015 swing low at 17370.

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