Talking Points:
- Nikkei 225 Strategy: Range trade during a possible consolidation
- Index is back in range, little threat to support at 15,978
- A challenge of resistance level at 17,653 is not ruled out in due course
JPN 225 reversed down to the middle of its January range of 15,978-17,653. Heightened downward momentum indicates choppy trading to come as the market is heavy on shorts. In absence of trend signal, volatility is likely contained above the firm support at 15,978.
As the earlier rebound finished, range trade likely dominates in the near term. JPN could enter a consolidation period after recent rapid declines. Topside is limited although a re-test of 17,653 resistance level is not ruled out.
Those who look to buy dips may also find opportunity during upcoming tumultuous price action.
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— Written by Nathalie Huynh, Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh