Featured Trade: Nikkei 225 below key medium term pivotal resistance with bearish elements

NIkkei 225 may see another fresh downleg below 22400 key medium-term pivotal resistance

Short-term technical outlook on Japan 225 (Wed, 15 Aug)

Key technical elements

  • From its recent minor swing low of 21847 printed on this Mon, 13 Aug, the Japan 225 Index (proxy for the Nikkei 225 futures) has staged a corrective rebound of 1.4% to print a high of 22396 on 14 Aug. Interestingly, the 14 Aug high of 22396 has coincided with our predefined medium-term pivotal resistance of 22400 as per highlighted in our latest weekly technical outlook report, click here for the details.
  • The recent push up of the Index has also stalled right below a minor descending resistance from 08 Aug high of 22802 and also a Fibonacci retracement/projection cluster (see 1 hour chart).
  • Right now, current price action of the Index has started to show exhaustion signs where it has broken below the minor ascending support from the 13 Aug low of 21847 now turns pull-back resistance at 22300 coupled with the 4 hour Stochastic oscillator that has started to inch down from an extreme overbought level. These observations suggest that the upside momentum of the recent push up has started to wane.

Key Levels (1 to 3 days)

Intermediate resistance: 22300

Pivot (key resistance): 22400

Supports: 22010 & 21850/750

Next resistance: 22800/840


Therefore as long as the 22400 pivotal resistance is not surpassed, the Index is likely to stage another potential bearish impulsive downleg to retest 22010 before targeting the near-term support zone at 21850/750.

On the other hand, a clearance above 22400 invalidates the bearish scenario for a squeeze up towards the lower limit of medium-term range resistance at 22800/840 in place since 22 May 2018.

Charts are from City Index Advantage TraderPro

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