nikkei 225 daily outlook wed 04 nov turning positive watch the 19190 potential upside trigger 171943

 

(Click to enlarge chart)

What happened yesterday

The Japan 225 (proxy for the Nikkei 225) has reacted off the 19190 short-term range top (resistance) and shaped a pull-back. However, this pull-back fell short of our first expected downside target at 18845 (printed a low of 18927 in the European session) before reversing up.

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

Key elements

• Recent price action has started to inch higher and it is now coming close to test the short-term range top in place in place since 24 October 2015 high at 19190. Even tough, the Index is right below the 19190 range-top, hourly candlesticks from 04 Nov 2015 low @8am are not showing any signs of exhaustion.
• The hourly RSI oscillator remains bullish above its support and the 50% neutrality level. In addition, it still has room for further potential upside before reaching its extreme overbought level. This observation suggests upside momentum remains intact.
• The next key intermediate resistance to watch will be at 19640 which is defined by the 1.618 Fibonacci projection from 02 November 2015 low @12pm to the 03 November 2015 high @8am projected from the recent low of 03 November 2015 @8pm. Also, in terms of Elliot Wave, the Index is likely undergoing the bullish wave 3 of the larger degree wave 5/. This current medium-term bullish impulsive wave structure remains intact since the 29 September 2015 low.

Key levels (1 to 3 days)

Pivot (key support): 18930

Resistance: 19190, 19640 & 20050

Next support: 18600

Conclusion

Based on the aforementioned technical elements, the initial short-term “desired” pull-back scenario towards 18600 has been invalidated. Right now, the Index is likely to shape a further upside movement in the medium-term as per highlighted in our latest weekly outlook published on Monday (click here for more details).

In the shorter-term, as long as the 18930 daily pivotal support holds and a break above the 19190 range top is likely to add impetus for a further push up to target the next resistance at 19640 in the first instance.

On the flipside, failure to hold above the 18930 pivotal support may jeopardise the bullish tone to see a slide to test the ascending channel’s support now at 18600.

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