nikkei 225 weekly outlook for 18 may to 22 may potential last push up scenario remains intact above

(Click to enlarge charts)

What happened last week

The Japan 225 (proxy for the Nikkei 225) has pull-backed at first before staging a bullish breakout above the 19780 intermediate resistance as expected.

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

Key elements

• The Index has continued to bounce higher above the lower boundary (support) of the medium term ascending channel in place since 16 October 2014 low (in dark blue) (see daily chart).
• The   lower boundary (support) of the medium term ascending channel (in dark blue) is now at 19450 which also corresponds closely with the 23.6% Fibonacci retracement of the up move from 14 January 2015 low to 23 April 2015 high (see daily chart).
• The intermediate term RSI oscillator remains bullish above its trendline support and also inched above the 50% neutrality level which suggests an increase in upside momentum (see daily chart).
• Interestingly, the “strong” rebound seen in the intermediate term RSI oscillator’s trendline support also coincides with the rebound seen on the lower boundary of the Index’s medium term ascending channel. This current observation is similar to the previous two occasions seen in 16 January 2015 low and 16 October 2014 low respectively (as depicted in light green arrows) (see daily chart).
• The 20440 & 20850 resistances also correspond with multiple Fibonacci projection clusters (see daily & 4 hour charts).

Key levels (1 to 3 weeks)

Pivot (key support): 19450

Resistance: 20400/20440 & 20850

Next support: 19030 & 18500/18400

Conclusion

Technical elements are still in favour of the last push up scenario for the medium term bullish trend in place since 14 April 2014 low. The weekly pivotal support has been tightened to 19450 for the potential last push up towards 20400/20440 and even 20850.

On the hand, failure to hold above 19450 is likely to invalidate the medium term bullish trend for a slide to retest the 07 May 2015 swing low at 19030. Only a clear break below 19030 may trigger a deeper decline towards the significant support at 18500/18400. Note that the 18500/18400 level coincides with the significant long-term neckline support of the “Double Bottom” bullish breakout.

Charts are from City Index Advantage Trader & eSignal

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