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Featured Trade: Japan 225 tracing out bearish reversal signals

Short-term technical outlook on Japan 225 (Thurs 28 Feb)



click to enlarge charts

Key technical elements

  • Despite the recent bullish breakout its former medium-term descending channel resistance from 01 Oct 2018 swing high on 12 Feb 2019, the price action of the Japan 225 Index (proxy for the Nikkei 225 futures) has started to lose upside momentum.
  • The 4-hour Stochastic oscillator has displayed bearish divergence signal at its overbought region since 13 Feb 2019 coupled with an impending minor bearish “Double Top” configuration seen in the 1-hour chart.
  • The neckline support of the minor “Double Top” rests at 21370.
  • The next significant near-term supports rests at 21220 (minor swing low of 19 Feb 2019) and 20900 (close to 23% Fibonacci retracement of the entire rebound in place since 26 Dec 2018 low + former swing high areas of 19 Jan/05 Feb 2019), also our medium-term range support set for this week (click here for a recap on our latest weekly outlook report).

Key Levels (1 to 3 days)

Pivot (key resistance): 21650

Supports: 21370 (trigger), 21220 & 20900

Next resistance: 21880

Conclusion

If the 21650 key short-term pivotal resistance is not surpassed and a break below 21370, the Index is likely to shape at least a minor impulsive down move to target its next near-term supports at 21220 & 20900.

On the other hand, a break above 21650 negates the bearish tone to see a continues of the corrective rebound towards the next resistance at 21880.

Charts are from City Index Advantage TraderPro



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