nikkei 225 daily outlook tues 08 mar 2016 coming close to 16500310 support for potential final upleg

(Click to enlarge charts)

What happened yesterday/earlier

In our earlier short-term daily outlook/strategy posted last Friday, 04 Mar 2016 (please click here for a recap), we have highlighted that the rally seen in the Japan 225 (proxy for the Nikkei 225 futures) is coming close to a short-term risk zone of 17100/220 (excess) where the Index is likely to shape a pull-back/consolidation.

The Index has hit the 17100/220 risk zone in the U.S. session on 04 Mar 2016 (printed a high of 17171) on the release of the latest U.S. nonfarm payrolls data for February 2016 and staged the expected pull-back thereafter seen throughout yesterday, 07 March 2016.

In this morning session, 08 March 2016, the Index has continued to decline and hit the upper limit of the expected short-term downside target at 16600 (printed a current low of 16569).

Key elements

• The current decline seen in the Index from its last Friday high of 17171 is coming close to the medium-term intermediate support at 16500 where we are expected another potential upleg to occur to complete the second phase of the countertrend rally that started from the 24 February 2016 low of 15540 (details are highlighted in our latest weekly outlook/strategy published yesterday, click link to recap)
• Right below the 16500 intermediate support, it will be the lower boundary of the bullish ascending channel that the Index has been evolving since the start of this countertrend rally cycle from 12 February 2016 low now at 16310.
• Both the 4 & 1 hour Stochastic oscillators have dipped back into their oversold region which highlights the potential of an upturn in price action of the Index close at this juncture.

Key levels (1 to 3 days)

Intermediate support: 16500

Pivot (key support): 16310

Resistance: 17100/220

Next support: 15600

Conclusion

The current pull-back seen in  the Index is now approaching a key support zone of 16500/310 where it is likely to shape a potential final upleg where the short-term upside target now stands at the 17100/220 resistance.

On the other hand, failure to hold above the 16310 pivotal support is likely to invalidate the final upleg scenario to see a deeper decline towards the next support at 15600 (24 February 2016 swing low area).

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.