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Nikkei 225 Technical Analysis: Pivoting Around 16,500 Again

Nikkei 225 Technical Analysis: Pivoting Around 16,500 Again

2016-07-28 05:12:00
Oded Shimoni, Junior Currency Analyst
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Talking Points:

- The Nikkei 225 stalls below the 17,000 handle

- Clear push away from 16,500 could indicate short term momentum

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

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The Nikkei 225 is trading sideways, pivoting around the 16,500 level. The index initially broke above 16,500 but has since seen momentum stall, failing to reach the 17,000 handle.

OBV showed a short term divergence on the move higher, while volatility is seeing a significant shift lower (on ATR 14-day study). Taken together, this might indicate that the recovery is losing some momentum.

Indeed, price managed to carve out a “bearish engulfing” pattern just below the 17,000 figure and a trend line resistance. This seems to make the 16,500 level crucial once again, and a clear push from the level could be indicative of short term momentum.

A move lower could put the focus initially 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 see a clear push above 16,500, this might put on the 17,000 handle for possible resistance, before the 2016 range highs below 18,000.

Nikkei 225 Daily Chart: July 28, 2016

Nikkei 225 Technical Analysis: Pivoting Around 16,500 Again

--- 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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