nikkei 225 weekly outlook for 02 mar to 06 mar mixed elements turn neutral between 19250 and 18700 2

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What happened last week

The Japan 225 (proxy for the Nikkei 225) has managed to push higher but it remained below the 19190 weekly pivotal resistance. Please click on this link for more details on our previous weekly outlook.

Key elements

• Bullish breakout above the 18300/18600 former neckline resistance of the long-term “Double Bottom” configuration in place since April 2003 (see monthly chart).
• Current price action is evolving on the “middle” of an ascending channel in place since 14 January 2015 (see daily chart).
• The upper and lower boundaries of the ascending channel (in dark brown) stands at 19250 and 18320 respectively (see daily chart).
• The 19250 resistance (upper boundary of the ascending channel) also confluences closely with a Fibonacci projection cluster (see daily & 4 hour charts).
• The 18320 support (lower boundary of the ascending channel) also confluences closely with the 38.2% Fibonacci retracement from 03 February 2015 low to the current 02 March 2015 high and 20-day Moving Average (see daily & 4 hour charts).
• The intermediate term RSI oscillator still has some “upside potential” before reaching its extreme overbought level (see daily chart).
• The short-term Stochastic oscillator has flashed a bearish divergence signal and still has room for further downside potential before reaching its oversold region (see 4 hour).

Key levels (1 to 3 weeks)

Resistance: 19250 & 20245

Support: 18700 & 18320

Conclusion

Technical elements are exhibiting mixed readings. We turn neutral and only a clear break below 18700 is likely to trigger an intermediate term decline towards the 18320 support.

On the other hand, a clearance above 19250 is likely to propel the Index higher to target the next resistance at 20245 (1.00 Fibonacci projection from the 16 October 2014 low to 14 January 2015 low).

Charts are from City Index Advantage Trader & eSignal

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