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Nikkei 225: Bounced from 10-week moving average

Since the beginning of the year, the Japanese main index gained over 19.5% but last week rose 0.5% and continues in a bullish phase since mid-September.

Last week the index initially dropped with a wide range but found enough buying pressure to erase all of its losses and managed to close near the high of the week, however closed within the previous week range, which suggests being slightly on the bullish side of neutral.

The stochastic is showing a overbought market although is displaying bullish momentum.

The Index has been in a range bound trading after making a new high for 2017 at 23,440 in November, however it managed to bounce from the 10-week moving average and seems to be motivated to re-test the 2017 high.

Expecting a downward move to a Fibonacci retracement at 22,214 on a bounce from 2017 high at 23,440 (scenario 1) however a break below the Fibonacci retracement at 22,214 would set in motion a deeper profit taking to a weekly support at 20,985 (scenario 2).