Since the beginning of the year the Japanese main index gained almost 4.0% and last week alone rose more than 0.5% additionally is in a bullish phase since late April.
Last week the index tried to rally but found enough selling pressure to clean most of its gains but still managed to close in the green although near the low of the week, however closed above the previous week low, which suggests a weak bullish momentum.
The Index broke above the four-month consolidation zone that goes from 18,838 up to 19,675 although we might see a retest of the 19,675 before another move upward.
The stochastic is showing an overbought market however is still displaying a strong bullish momentum.
Expecting an upward move to a weekly resistance at 20,140 on a bounce from a 2016 high at 19,675 (scenario 1) however a break below 2016 high at 19,675 may trigger a downward move of the Japanese index to the lower end of the consolidation zone at 18,838 (scenario 2).