Featured Trade: Minor pull-back in progress for Nikkei 225

Nikkei 225 undergoing minor pull-back.

Short-term technical outlook on Nikkei/Japan 225 Index (Thurs 18 Apr)

click to enlarge charts

Key technical elements

  • The recent rally 3.7% seen in the Japan 225 (proxy for Nikkei 225) from its 10 Apr 2019 low of 21550 has hit a minor ascending channel resistance at 22350 and broke below yesterday 17 Apr Asian session low of 22185.
  • Short-term momentum reading has turned negative as the 4-hour Stochastic oscillator has inched downwards after a prior bearish divergence signal at its extreme overbought level.
  • The next significant support rests at 21970/21880 which is defined by the lower boundary of  minor ascending channel from 25 Mar 2019 low, 23.6% Fibonacci retracement of the recent up move from 25 Mar 2019 low to 17 Apr 2019 high & the medium-term pivotal support as per highlighted in our weekly technical outlook report published on Mon; click here for a recap.

Key Levels (1 to 3 days)

Intermediate resistance: 22230

Pivot (key resistance): 22350


Next resistance: 22880


Given that the 1-hour Stochastic oscillator has reached an extreme oversold level, the Index may shape a bounce first toward the 22230 intermediate resistance with a maximum limit set at the 22350 key short-term pivotal resistance. Thereafter, another round of potential push down to target the 21970/21880 support in order to complete the minor pull-back phase.

On the other hand, an hourly close above 22350 invalidates the further pull-back scenario for a continuation of the up move towards the next resistance at 22880 (16 Oct/03 Dec2018 medium-term swing high area).

Charts are from City Index Advantage TraderPro

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