Talking Points:
- Nikkei 225 made a short term double top at the 16,776 level
- Follow-through on the technical pattern may imply lower prices
- Move lower might put the 15,800 support level in focus
The Nikkei 225 has made a short term double top technical pattern at the 16,776 resistance level, which is the 0.50 Fib as measured from the April 22 high at 17,769. The Index also made a bearish “Shooting Star” candle formation in the H4 chart at the same level, and broke the 16,500 support, which coincided with the 0.382 Fib. Collectively, this might imply lower prices are ahead.
The price has been ranging between the well-defined 18,000 resistance zone and the 15,000 support since the start of the year, with gains appearing to be corrective in the context of the near term down trend.
Levels of interest on a move lower may be the 16,000 handle followed by the prior support at around 15,800, with the range bottom at 15,000. Interim support might be found at the April 7 low at around 15,380.
However, if the technical pattern fails, focus might be put on the 17,000 handle followed by the 18,000 range top resistance zone.
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Nikkei 225 H4 Chart: May 13, 2016
--- Written by Oded Shimoni, DailyFX Research
To contact Oded Shimoni, e-mail instructor@dailyfx.com
