nikkei 225 daily outlook thurs 02 june 2016 potential further drop below 16750 resistance 1813942016

(Click to enlarge charts)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has broken both the short and medium-term pivotal supports at 16990 and 16740 respectively.

The preferred medium-term corrective rebound scenario towards the range top has been invalidated. Please click on this link to recap our previous daily short-term outlook/strategy.

Key elements

The bearish breakdown from 16740 has led to Index to see a downside risk to test the ascending range support (in purple) in place since 12 February 2016 low at 15820/615 (see daily chart).
In conjunction, the daily (medium-term) RSI oscillator has broken below the first support and 50% neutrality level which reaffirms further downside pressure for the Index.
The significant short-term resistance is now at 16750 which is the former pull-back support of the short-term rectangle range.
The short-term support rests at 16330 as defined by the minor swing low areas of 13/16 May 2016.

Key levels (1 to 3 days)

Pivot (key resistance): 16750

Support: 16300

Next resistance: 16990 & 17300

Conclusion

The tide has turned back to the bears within the ascending range. Right now, the Index may see a direct drop towards the next support at 16300 in the first step below the 16750 daily short-term pivotal resistance.

Only a break above the 16750 short-term pivotal resistance is likely to negate the bearish one to see a relief rally back towards the next resistance at 16990.

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