nikkei 225 daily outlook tues 08 sep bottoming out with bullish descending wedge 1239452015
<p>(Click to enlarge chart) Key elements Despite a weak performance by the Nikkei 255 (cash) at its closing today, 08 September 2015 where it shed […]</p>
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Key elements
- Despite a weak performance by the Nikkei 255 (cash) at its closing today, 08 September 2015 where it shed 433 points (-2.4%), technical elements have turned positive.
- Since the high on 29 August 2015 @12am, the Japan 225 (proxy for the Nikkei 225) has traced out an impending bullish “Descending Wedge” (highlighted by orange lines) chart formation with its lower(support) boundary at 17370.
- The “Descending Wedge” chart formation is considered as bullish as we can see that the magnitude of the “lower lows” is lesser (less steep) than the magnitude of the “lower highs” which indicates that downside momentum has started to abate.
- Based on the Elliot Wave Principal, a typical of “Descending Wedge” evolves into 5 waves (a,b,c,d,e). Current price action of the Index has finished the final downleg movement of the e wave which suggests that the “Descending Wedge” has completed its form and a potential bullish reversal should follow next.
- The upper (resistance) boundary of the “Descending Wedge” stands close to 18010 which is the upper limit of the weekly neutrality zone as per highlighted in our latest weekly outlook (please click here for more details).
Key levels (1 to 3 days)
Pivot (key support): 17370
Resistance: 18010 & 18470
Next support: 17160
Conclusion
Technical elements have turned positive and a break above the 18010 intermediate resistance (upper boundary of the “Descending Wedge” is likely to reinforce a further recovery to target 18470 in first step.
On the contrary, failure to hold above the 17370 daily pivotal support may invalidate the recovery scenario for a further decline to retest the “Black Monday”, 24 August 2015 low at 17160.
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