Since the beginning of the year the Japanese main index gained more than 4.0% although last week alone fell almost 1.0% and continues in a bullish phase since late April.
Last week the index tried to rally but found enough selling pressure to erase all of its gains and managed to close in the red, near the low of the week, however closed within the previous week range, which suggests being slightly on the bearish side of neutral.
The Index seems to be trapped between 19,675 the previous consolidation and 20,140 a weekly resistance however there is still room to an upward push to 2015 high at 20985.
The stochastic is showing an overbought market however is displaying lack of momentum.
Expecting an upward move to a weekly resistance at 20,985 on a break above the previous high at 20,245 (scenario 1) nevertheless a bounce from 2016 high at 19,675 may trigger a upward move of the Japanese index to the lower end of the weekly resistance zone at 20,140 (scenario 2).