nikkei 225 daily outlook thurs 21 apr 2016 potential short term bullish tone remains intact above 17

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has failed to have a clear break below the downside trigger level at 16860 (only tested) and did a strong upside reversal and broke above the 17150 short-term pivotal resistance.

Please click on this link for a recap on our previous daily short-term outlook/strategy.

 Key elements

• Medium-term upside momentum has turned positive as the daily has staged a bullish breakout above its former trendline resistance and still has room for further upside before reaching its extreme overbought level.
• Since the low of 08 April 2016, the index has continued to evolving with a short-term bullish ascending channel and now price action is showing potential for a test on the upper boundary (resistance) of the channel at 17770 which also confluences with a Fibonacci cluster from various degrees (see daily & hourly charts).
• The short-term (hourly) Stochastic oscillator is still oriented to the upside and still has room to manoeuvre before reaching its extreme overbought level. These observations suggest that short-term upside momentum of price action remains intact.
• The first significant short-term support now rests at 17080 which is the former minor swiing high area of 19 April 2016 follow by the 16860/720 zone which is defined by the lower boundary of the short-term ascending channel and pull-back support of former range bullish breakout.

Key levels (1 to 3 days)

Pivot (key support): 17080

Resistances: 17450 & 17770

Next support: 16860/720

Conclusion

Yesterday’s price action has confirmed that short-term upside momentum remains intact and it does not pay to fight with it at the moment. As long as the 17080 daily short-term pivotal support holds, the Index is likely to see a further potential up move to target the resistances at 17450 and 17770.

However, a break below the 17080 short-term pivotal support may negate the bullish tone for a slide towards the next support at 16860/720.

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