Talking Points:
- The Nikkei 225 continues to pivot around the 16,500 level
- A move below 16,000 could expose the longer term range lows
- Gains continue to appear corrective in the context of the near term downtrend
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The Nikkei 225 is trading lower at the time of writing, around support at the 16,000 level.
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.
With this backdrop, after forming a “bearish engulfing” pattern just below the 17,000 figure and a trend line resistance, combined with an OBV divergence, the price traded lower and currently sits at possible support on the 16,000 handle.
A move below the 16,000 area could expose the 15,000 range lows once again, but reduced levels of volatility makes further breaks lower seem less probable at this stage without a fundamental catalyst.
A break above the 17,000 handle could expose the 2016 range highs below 18,000.
The 16,500 level continues to prove influential for short term momentum, and a hold below the level might be indicative of further losses ahead for the index.
Nikkei 225 Daily Chart: August 3, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
