Nikkei 225 Technical Analysis: Index Gathering Momentum
- Nikkei 225 is currently above the 17,000 resistance turned support
- Focus might now be put on the longer term range top
- A break above 18,000 may signal the near term down trend has shifted
The Nikkei 225 is trading above the 17,000 resistance turned support (at the time this report was written) as the index appears to be gathering momentum to the upside.
The price was able to close above 17,000 on a daily basis yesterday, after a move lower appears to have been rejected intra-day. Indeed, it seems like the close above the level might have helped conviction, as the index is trading higher today from a low of 16,976.50.
The Nikkei 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 from June 2015 highs.
The close above 17,000 might imply higher probability for a test of the 18,000 range top resistance zone (around 17,680-18,000). A break above these levels may suggest that the near term down trend has shifted and that a longer term up trend from 2012 might resume.
However, if buyers can’t hold the price higher, a move below 17,000 may put the focus on the 16,776 support level, followed by the 16,500 level, which seemed influential for the last weeks.
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Nikkei 225 Daily Chart: May 31, 2016
--- Written by Oded Shimoni, DailyFX Research