What happened last week
With reference to last weekly outlook (Still holding above support region) dated 12 May 2014, the Japan 225 Index (proxy for Nikkei 225) has challenged the 14200/14100 support region but managed to hold above it with an excess at 14000.
Key elements
- The Index has managed to hold above the trendline support (in blue) of a complex range configuration since 22 May 2013 at 14000 (see daily chart).
- The intermediate trendline resistance joining the highs since 29 Dec 2013 is now at 14560 (see daily chart).
- The 14000 level corresponds closely to the 61.8% Fibonacci retracement from 14 Apr 2014 low (see 4 hour chart).
- The 15340/15400 “rectangle range” top corresponds closely to the 1.618 Fibonacci projection from 14 Apr 2014 low (see 4 hour chart).
Levels
Pivot (key support): 14000
Resistance: 14560 & 15340/15400
Next support: 13880 & 13170/13000
Conclusion
The market continues to hold above the trendline support (now at 14000) of its complex range configuration in place since 22 May 2013. Therefore, we are still in favour of a multi-week recovery. However, the Index needs to break above the intermediate trendline resistance at 14560 in order for it to gain impetus for a potential push up towards the short-term “rectangle range” top at 15340/15400.
On the other hand, a break below 14000 will jeopardise the expected recovery to see a retest on the 13880 horizontal support. Only a break below 13880 is likely to trigger a further correction towards the key long-term support at 13170/13000.
Disclaimer
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