Talking Points:
- Focus may shift to 16,000 again after the index lost 16,500
- The move below 16,500 marks a break to the short term bullish structure
- Buyers might hold back before reentering at more favorable prices
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The Nikkei 225 (CFD: JPN225) is trading lower today, after the index failed to hold above the important 16,500 support level.
The 16,500 support has proven key in the past for deciding short term directional conviction, and the break below the level suggests that the short term bullish structure since the Brexit recovery has been broken (combined with a break of the short term trend line and a move back below the 200 day SMA).
Indeed, 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.
Taking this into consideration might imply that buyers could hold back before attempting to reenter at more favorable prices, with eyes possibly on the 16,000 handle in the short term, followed by the all-important range lows around 15,000.
Bullish hopes might be reignited if the index manages to print a swift reversal above the 16,500 level; a scenario which seems likely to shift focus to 17,000 again.
Nikkei 225 Daily Chart: September 15, 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
