nikkei 225 daily outlook tues 26 apr 2016 potential bearish tone remains intact below 1734017520 res

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has continued to fall after hitting last Friday’s expected upside target (resistance) at 17770 which is right below this week key medium-term pivotal resistance at 17900. Please click on this link for a recap on our latest weekly technical outlook/strategy published yesterday.

This morning price action has broken yesterday’s U.S. session low at 17335 which indicate further potential weakness ahead for the Index.

Key elements

• Since the high of 17772 printed on last Friday, 22 April 2016 and based on the Elliot Wave Principal and fractal analysis, the Index is now likely undergoing a bearish impulsive wave structure of a minor degree which tends to evolve in a set of five waves, labelled as a/ (see 1 hour chart).
• The first minor support rests at 17130 which is defined by the lower boundary of the short-term ascending channel in place since 08 April 2016 follow by the significant support zone of 16860/720, the pull-back support of the former range’s upper boundary bullish breakout (see 4 hour chart).
• Short-term intermediate resistance stands at 17340 which is the former minor range bottom formed in yesterday’s Europe/U.S. sessions follow by the significant resistance at 17520, the minor range top of yesterday’s Europe/U.S. sessions
• The 4 hour Stochastic oscillator is still exhibiting a reading that downside momentum of price action remains intact as it has not reached its extreme oversold level.

Key levels (1 to 3 days)

Intermediate resistance: 17340

Pivot (key resistance): 17520

Supports: 17130 & 16860/720

Next resistance: 17900 (weekly pivot)

Conclusion

Bearish tone remains intact since the decline from last Friday, 22 April 2016 high of 17772. The short-term intermediate resistance at 17340 should cap any minor rebound in price action with a maximum limit set at the 17340 daily short-term pivotal resistance for a further potential decline towards 17130 before 16860/720.

On the flipside, a clearance above the 17520 short-term pivotal resistance may put the bears on hold to see another round of push up towards the 17900 weekly pivotal resistance.

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