Nikkei 225 Technical Analysis: 16,500 level Proving Influential

Talking Points:

- Nikkei 225 seems to have failed a short term double top at the 16,776 level

- Price appearing to pivot around the 16,500 level

- Directional conviction seems lacking at the time being

The Nikkei 225 is trading sideways after appearing to fail in finding follow-through on 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 16,776 resistance level might still contain price, since it seems the index is pivoting around the 16,500 level, as longer term directional conviction appears lacking at the time of writing. Other topside levels of interest may be the 17,000 handle followed by the 18,000 range top resistance zone (around 17,680-18,000).

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.

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Nikkei 225 Daily Chart: May 17, 2016

--- Written by Oded Shimoni, DailyFX Research

To contact Oded Shimoni, e-mail instructor@dailyfx.com