Nikkei 225 Technical Analysis: Upside Might Need a Hold Above 16,500
- Index short term rally stalled at the July high
- 16,500 acted as support, and the index might need to hold above the level for further upside momentum
- Focus may turn to the 17,000 resistance area if price manages to stay above 16,500
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The Nikkei 225 short term rally has stalled slightly this week, after the index managed to carve out a swing to match the July highs (approximately).
The Nikkei fell just short of the confluence resistance zone we highlighted in the last report; around the 17,000 handle, 200-day SMA and potential trend line resistance.
At this stage, the index might need to hold above 16,500 for any further upside conviction. This scenario seems likely to shift focus to the aforementioned resistance area around 17,000.
A break above 17,000 may be significant and expose the range highs slightly below the 18,000 level.
With that said, if the price moves below 16,500, this may shift focus to the 16,000 handle for potential support, and a break lower could expose the 15,000 range lows.
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
Nikkei 225 Daily Chart: August 18, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.