Featured Trade: Ascending Wedge bearish breakdown in Nikkei 225

Another potential downleg via bearish breakdown from "Ascending Wedge".

Short-term technical outlook on Japan 225 (Tues, 29 Jan)



Key technical elements

  • The Japan 225 Index (proxy for the Nikkei 225 futures) has staged a bearish breakdown below the lower boundary/support of the minor  “Ascending Wedge” bearish range configuration in place since the 26 Dec 2018 low in yesterday, 28 Jan 2019 U.S. session reinforced by weaker than expected earnings releases from Caterpillar and Nvidia (bellwether stocks that are highly dependent on the health of the global economy) (see 4 hour chart).
  • This observation suggests that the on-going rebound of 10% in place since the 26 Dec 2018 may have formed a top at 20960 on 18 Jan 2019, U.S. session. In the shorter-term (intraday), the Index may shape a minor pull-back first towards the intermediate resistance at 20600 (yesterday, 28 Jan U.S. session minor swing high) as the hourly Stochastic oscillator has now dipped into the oversold region.
  • Key short-term resistance stands at 20680 which is defined by the pull-back resistance of the former “Ascending Wedge” range support and the 61.8% Fibonacci retracement of the yesterday’s slide from 20915 high to today, 29 Jan Asians session current intraday low of 20477.
  • Near-term supports rest at 20200 (the medium-term downside trigger, click here for a recap on latest weekly technical outlook and 20000 (minor swing low areas of 07/14 Jan 2019 & close to 50% of Fibonacci retracement of the rebound from 26 Dec 2018 low to 18 Jan 2019 high).

Key Levels (1 to 3 days)

Intermediate resistance: 20600

Pivot (key resistance): 20680

Supports: 20200 & 20000

Next resistance:21020 (medium-term pivot)

Conclusion

If the key short-term pivotal resistance at 20680 manages to hold the minor rebound, the Index is likely to stage another potential downleg to target the 20200 medium-term downside trigger level and a break below it exposes the next support at 20000.

However, a clearance above 20680 put the bears on hold for a squeeze up towards the medium-term pivotal resistance at 21020.

Charts are from City Index Advantage TraderPro




Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.