Talking Points:
- Index short term rally stalled at the July high
- 16,500 is holding as support, upside momentum seems likely to shift focus to 17,000
- Volatility hits 2016 lows (based on 20-day ATR readings)
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The Nikkei 225 is finding support at 16,500 at the time of writing, after the index edged down from its July highs around 16,929.
At this stage, further upside conviction seems likely to shift focus to a resistance area around 17,000; a confluence resistance zone with the 17,000 handle, 200-day SMA and potential trend line resistance.
A break above 17,000 may be significant and expose the range highs slightly below the 18,000 level.
With that said, if price moves below 16,500, this could potentially put the spotlight on the 16,000 handle for support, and a break lower could expose the 15,000 range lows.
Major swings might not be on the immediate horizon though, unless a catalyst presents itself, as 20-day ATR volatility measures indicate we are currently trading at 2016 volatility 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 23, 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
