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Nikkei 225 Technical Analysis: Index Stalling Below 17,000

Nikkei 225 Technical Analysis: Index Stalling Below 17,000

Oded Shimoni, Junior Currency Analyst

Talking Points:

- The Nikkei seems to lose momentum as we approach the 17,000 for possible resistance

- Clear push below 16,500 may indicate downside momentum

- Gains appearing to be corrective in the context of the near term downtrend, OBV divergence

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The Nikkei 225 is treading water after moving above the 16,500 level. The index broke above 16,500 but has since seen momentum stall, failing to reach the 17,000 handle for possible resistance.

OBV is showing a short term divergence on the move higher, while volatility is seeing a significant shift lower (on an ATR 14-day study). Taken together, this might indicate that the recovery is losing some momentum, which could imply that a push below 16,500 could signal that short term momentum favors the downside. This could put the focus on the 16,000 area for possible support.

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 from June 2015 highs.

A move below the 16,000 area could expose the 15,000 range lows once again.

If price manages to stay above 16,500, focus might be put on the 17,000 handle for possible resistance, before the 2016 range highs below 18,000.

Nikkei 225 Daily Chart: July 25, 2016

Nikkei 225 Technical Analysis: Index Stalling Below 17,000

--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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