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Nikkei 225: Trading within a consolidation zone

Since the beginning of the year the Japanese main index continues flat however last week fell more than 1.0% and is in a potential phase change, shifting from a bullish to a warning phase.

Last week the index initially fell with a narrow range and closed in the red, near the low of the week, in addition managed to close within the previous week range, which suggests being slightly of the bearish side of neutral.

The Index is trading within a consolidation zone that goes from 18,838 up to 19,675 and should remain until a breakout occurs.

The stochastic is showing an overbought market and is beginning to display bearish momentum.

Expecting a downward move to a weekly support at 18,200 on a break below the Fibonacci retracement at 18,838 (scenario 1) however a bounce from the 23.6 Fibonacci retracement at 18,838 may push upward the Japanese index to 2016 high at 19,675 (scenario 2).