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Nikkei 225: May find some resistance at 2013 high

Since the beginning of the year the index lost more than 12.0% but last week managed to rise in excess of 6.0% and is in a recovery phase since mid-July.

Last week the index rallied with a wide range and closed near the high of the week in addition managed to close above the previous week range, suggesting a strong bullish momentum.

The stochastic is showing a strong bullish momentum although is still below the 50 mid line.

Expecting an upward move to a weekly resistance at 17,450 on a break above the previous week high at 16,695 (scenario 1) however a break below the weekly resistance at 16,105 may drag down the index to a key level at 15,315 (scenario 2).