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Hugo in HTO Trading,

Nikkei 225: In a sideways action

Since the beginning of the year the index lost more than 9.0% but last week managed to rally in excess of 2.5% and is in a recovery phase since mid-July but getting ready to shift to an accumulation phase.

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 although the 50-week moving average at 17,227 may present to be a strong resistance.

The stochastic is showing bullish momentum and is above the 50 mid line.

Expecting an upward move to a weekly resistance at 18,200 on a break above the previous week high at 17,115 (scenario 1) but a bounce from a weekly resistance at 17,450 may drag down the index to a weekly support at 16,445 (scenario 2).