nikkei 225 update short term pull back negated potential direct rise in progress 1821422016

Daily Outlook, Thurs 14 July 2016 (Update)

(Click to enlarge charts)

Key elements

• The Japan 225 Index (proxy for the Nikkei 225 futures) has broken above the intermediate short-term range top at 16410 which invalidated the short-term pull-back scenario towards 16000 support.
• The current rally from the 08 July 2016 low of 15103 appears to be extending and the daily RSI oscillator continues to be bullish above its former descending trendline (depicted in dotted green) and the 50% level. These observations suggest that the descending range top/resistance in place since 24 April 2016 now at 16670 is likely to be broken out.
• The next key short-term resistance stands at 17100/240 which is defined by the minor swing high area of 31 May 2016 and the 2.00 Fibonacci projection of the rally from 24 June 2016 low (an extended wave 3/ based on the Elliot Wave Principal).
• The key short-term support now stands at 16200 which is yesterday’s minor swing low area and the 23.6% Fibonacci retracement of the up move from 08 July 2016 low to 13 July 2016 high of 16579.

 Key levels (1 to 3 days)

Intermediate support: 16410

Pivot (key support): 16200

Resistances: 16670 & 17100/240

Next support: 15830

Conclusion

Short-term pull-back scenario negated. As long as the new 16200 short-term pivotal support holds, the Index is likely to see a potential direct rise to target the resistances at 16670 and 17100/240 next.

However, failure to hold above the 16200 short-term pivotal support is likely to put the bulls on hold again and revive the pull-back scenario to test the next support at 15830.

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