JPN225 Consolidates on Support
- Strategy: Mind stop loss during consolidation
- Support levels: 16,525.5; 15,848; 15,523. Top is 50% Fibonacci at 17,438
- Momentum halts after a sharp fall, give way to more sideways trading
A consolidation persists in Nikkei 225 right on top of 16,525 support level, even as momentum signals dip. It is uncertain whether the level will hold today, however downside potential is limited.
Traders with short position could keep stops close to 50% Fibonacci at 17,438 for protection in case of a surprised rebound. When and if the index extends on the downside, firm support would come at 15,848.
There is little chance for range trade given the narrow trading band so far. Next major development would likely be a break of support and resumption of reversal, rather than a contest of resistance.
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--- Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.