nikkei 225 weekly outlook for 13 apr to 17 apr pull back towards 19600 before new potential upleg 46

(Click to enlarge charts)

What happened last week

The Japan 225 (proxy for the Nikkei 225) has rallied and met our expected target at 20080. Please click on this link for more details on our previous weekly outlook.

Key elements

• The lower boundary (support) of the medium term ascending channel (in brown) in place since 14 January 20125 is now at 19250 which also confluences with a Fibonacci projection cluster (23.6% retracement from 14 Jan 2015 low to 10 April 2015 high + 61.8 % retracement from 01 April 2015 low to 10 April 2015 high) (see daily & 4 hour charts).
• The 34-day Moving Average (in blue) is coming to act as a support at 19250 (see daily chart).
• The intermediate term RSI oscillator remains above its supports and 50% level. However, it has flashed a bearish divergence signal which highlights the risk that the medium term bullish trend in place since 14 January 2015 is coming to an end soon (see daily chart).
• 20080 and 20440 are Fibonacci projection clusters (see daily & 4 hour charts).
• The short term Stochastic oscillator has flashed a bearish divergence signal and exited from its overbought region. It still has room for further potential downside before reaching its oversold region (see 4 hour chart).

Key levels (1 to 3 weeks)

Intermediate support: 19600

Pivot (key support): 19250

Resistance: 20080 & 20440

Next support: 18500/18100

Conclusion

Current technical elements suggest that below 20080, the Index is likely to see a pull-back towards 19600 with a maximum limit set at the 19250 weekly pivotal support before another potential upleg materialises to target next resistance at 20440.

On the other hand, a break below 19250 is likely to damage the medium term bullish trend for a deeper slide towards the next support at 18500/18100. . Note that the 18500/18100 zone coincides with the significant long-term neckline support of the “Double Bottom” bullish breakout (see monthly chart).

Charts are from City Index Advantage Trader & eSignal

Disclaimer

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