nikkei 225 daily outlook thurs 14 oct turning positive watch the 18740 potential upside trigger leve

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has challenged and broke below the 17800 lower limit of the neutrality zone range in the overnight U.S. session. However in today’s morning session, the Index is has managed to reverse up and traded back above the 17800 level.

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

Key elements

• The earlier surge in the price action of the  Index is now “resting” just below the 18100 short-term resistance as per defined by the pull-back resistance (in dotted red) and the descending trendline.
• Interestingly, the hourly (short-term) RSI oscillator has broken its similar trendline resistance (in dotted green) and the 50% neutrality level. Prior to this bullish breakout, the RSI has traced out a bullish divergence signal (higher lows in RSI versus lower lows in price action of Index) at its oversold region. These observations suggest a revival in upside momentum and a pre-signal for a potential bullish price action of the Index.
• The significant short-term resistances to watch will be at 18440 (range top in place since 07 October 2015 high) follow by 18740 (the swing high of 09 September 2015).

Key levels (1 to 3 days)

Pivot (key support): 17800

Resistance: 18100, 18440 & 18740

Next support: 17400/17280

Conclusion

Technical elements have turned positive for the Index. As long as the 17800 daily (short-term) pivotal support holds and a break above the 18100 level is likely to add impetus for a push up to retest the range top at 18440 and even 18740 next.

On the hand, failure to hold above the 17800 pivotal support may invalidate the bullish scenario for another round of choppy downward movement to test the pull-back support of the “Descending Wedge” bullish breakout at 17400/17280.

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