Talking Points:
- Nikkei Strategy: Initial target at 10-day MA, to be adjusted as the rebound strengthens
- Immediate resistance are the moving averages, then neckline of head-and-shoulders
- Previous low at 17,098 supports the downside, unless momentum changes
An upward reversal has materialised in Nikkei index as it rose well above a previous low at 17,098. This is driven by an upturn in momentum, though too early for a confirmation in trend signals. Therefore traders should be mindful of support levels.
After a break of 5-day moving average, the index is heading up to 10-day moving average at 17,965. Above that come two resistance levels: 20-day moving average at 18,456 then the neck line of head-and-shoulders at 18,633. Upside movement dominates price action at this early stage, similar to a reversal in December.
Investors with long positions could look for initial target around 10-day MA, to be adjusted higher if the level is threatened. In absence of trend signal, there is risk that the rebound may transform into a consolidation. A previous daily low at 17,098 provides an immediate support level.
Daily Chart - Created Using FXCM Marketscope
Losing Money Trading Forex? This Might Be Why.
--- Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh
