Since the beginning of the year the index lost more than 8.0% but last week managed to rally in excess of 2.0% however the Japanese Index continues in a bullish phase since early October.
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 high, which suggests a strong bullish momentum. The index is now trading above the 50-week moving average that should provide a dynamic support.
The stochastic is showing an overbought market however is still displaying a strong bullish momentum.
Expecting an upward move to a weekly resistance at 18,200 on a break above the previous week high at 17,320 (scenario 1) however a bounce from a weekly resistance at 17,450 may push the index down to weekly support at 16,445 (scenario 2).