Nikkei 225 Technical Analysis: Consolidate above Lower Bound of Range
- Nikkei 225 Strategy: Range trade returns as support holds firmly
- Weak downward bias may not be enough to facilitate a break of support
- Consolidation could prolong given year-end thin liquidity
The Nikkei 225 paused ahead of 19,341 support level or lower bound of its November range for a fourth session today. Weak downward momentum indicates muted price action ahead. The index is truly detached from October-November bullish channel, to trade within a range of 19,397-19,989 (61.8% to 76.4% Fibonacci).
A break of lower bound and support level becomes more unlikely, the longer Nikkei consolidates at current levels. Even in the event of a breach, another firm support of 50% Fibonacci would emerge at 18,918. The bears should preserve provision for a failure to return to the downside.
Range traders may find dip buying opportunity from here on, for target around a resistance level and 76.4% Fibonacci. Trend traders could wait out a bit longer or follow price action around any external/macro shock. Notice that thin market near the year-end will likely provoke outliers rather than a solid trend.
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--- Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.