The Nikkei 225 tested important resistance today. The area between 16,985 and 17,200 looks potentially significant to me as it marks a relatively tight confluence of the 50-day moving average, the 38% retracement of the June - February decline, the measured move of the early February advance and the 78.6% retracement of the February range. There is also some interesting timing this week as it is the 100% retracement in time of the October 2014 - June 2015 advance. Given this price/time convergence I think there is a decent chance the index could try and turn back down before the end of the week. Traction over 17,200 would invalidate this view.
My trade entry is conditional. I want to sell the Nikkei 225 on a stop if it trades under 16,680 or I want to sell at 17,040 – whichever happens first cancels the other. My stop on the former will be a daily close just above today’s high while the stop on the latter would be a daily close above 17,200. If neither is triggered by the end of trading tomorrow I will cancel both.
