Talking Points:
- Nikkei 225 has bounced off prior support at the 15,000 handle
- A move lower might put the focus on the 16,000 handle for possible resistance
- Further downside conviction may expose the 14,000 handle
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The Nikkei 225 appears to have found some support at the 15,000 handle following a sharp move lower as the EU Referendum and the “Brexit” decision sent the financial markets into disarray.
Last week, we took a much longer term view of the index in anticipation of the upcoming volatility. As the market might now slowly adjusts to the new reality, we look to return to a slightly shorter term outlook.
The Nikkei 225 seems to have bounced from the area of support highlighted in the prior report, between the 0.50 Fib at 14,518 (As was drawn for the last monthly leg higher from the June 2012 low at 8,190 to the June 2016 high at 20,961) and the 15,000 handle.
If the index continues to the upside, focus might be put on the 16,000 handle followed by the 16,500 level for possible resistance.
If downside conviction remains following the “Brexit” vote, the index might need to clear the aforementioned support zone before focus may be put on the 14,000 handle and the 13,000 level, which coincides with the 0.618 Fib of the long term uptrend.
Nikkei 225 Daily Chart: June 27, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail instructor@dailyfx.com
