Talking Points:
- Nikkei 225 Strategy: Position for break of resistance, keep tight stops for caution
- Firm resistance at 50% Fibonacci of 17,438.5 after 38.2% Fibonacci breach
- Strong upward momentum drives the climb
JPN 225 is fast on a rise together with risk assets after good US economic data rejuvenated risk sentiment. A resistance and 38.2% Fibonacci at 16831 is being challenged, with good chances of a breach today or tomorrow.
Fibonacci levels will be key indicators to watch along the index’s topside retracement. Upon a breach, next resistance level will be 50% Fibonacci at 17,438.5. All indicators support the case of higher extensions for now.
Traders with long position should be mindful of price fluctuation around the resistance level, otherwise all is good for higher moves. Range traders who look to sell at failure to break may hold out until momentum signals do reverse down (if any) instead of making hasty decision close to the level.
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--- Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh
