Featured Trade: Japan 225 tracing out bearish reversal signals

Minor "Double Top" in Japan 225

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


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

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (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.