nikkei 225 weekly outlook 21 sep to 25 sep back towards significant range support at 1758017160 1361

 

(Click to enlarge charts)

What happened last week

The Japan 225 (proxy for the Nikkei 225) has managed to push up and almost hit our first expected target at 18740 (printed a high of 18661 on 18 September 2015).

Thereafter, it is a “one-way ticket” decline after the U.S. central bank, Fed kept its overnight Fed Funds policy interest rate unchanged at 0.25% since December 2008.

Please click on this link for a review on our previous weekly outlook.

Key elements

• The price decline since late last week has brought the Index back close to the “Black Monday”, 24 August 2015 low of 17160 (see weekly chart).
• The “Black Monday” 24 August 2015 low of 17160 is considered significant as it coincides with a long-term trendline support (in dark blue)  in place since 14 October 2012, the pull-back support (in dotted purple) of a former 17 months range bullish breakout and the low of the weekly bullish “Hammer” candlestick pattern (see weekly chart).
• The weekly (long-term) RSI oscillator continues to hover around at its supports (see weekly chart).
• As long as the 17160 low of 24 August 2015 “Black Monday” is not broken, the Index is still shaping an impending bullish “Double Bottom” configuration with its neckline resistance at 19190 which also confluences closely with the 200-day Moving Average (in orange) (see daily chart).
• The trendline support that is joining the lows of  the “Black Monday”, 24 August 2015 and 08 September 2015 @12pm is now at 17580 (see 4 hour chart).
• The 4 hour (short-term) Stochastic oscillator is now coming close to its extreme oversold level which suggests a potential upside turnaround for the Index at its range support (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 17580

Pivot (key support): 17160

Resistance: 18470 & 19190

Next support: 16400

Conclusion

Last week’s price action has brought the Index back towards its significant range support zone of 17580/17160. As long as the 17160 weekly pivotal support holds, the Index may see a push up to retest the first range top (resistance) at 18470.

On the other hand, a crack below the 17160 pivotal support is likely to invalidate the bullish “Double Bottom” configuration to continue the multi-month downtrend to target the next support at 16400 in first step.

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