Talking Points:
- Strategy: Prepare for a serious contest of 50% Fibonacci or even a breach
- Upward pressure supports the current rally
- Support level is 16,461.5 and resistance level is 18045.8
A rally inthe Nikkei 225 continued into the second week as it headed to 50% Fibonacci at 17,438.5. Higher extensions are possible given a building momentum. A resistance level and 61.8% Fibonacci comes above that at 18,045.8.
This is the first time the Nikkei has seriously tested 50% Fibo since a month-long consolidation in March. Hence it is a positive signal for investors, although the risk of a double top looms. If the index fails to break through resistance level, upward momentum would likely retain it around current levels.
As the focus has shifted to levels above 17,000, an immediate support at 16,461.5 is unlikely to be challenged soon.
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Daily Chart - Created Using FXCM Marketscope
--- Written by Nathalie Huynh, Strategist for DailyFX.com
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