The momentum indicators appear to be sending a mildly bullish signal, but cracks are forming. The RSI is dipping towards 50 and the Average Directional Movement Index (ADX) signals the presence of a strong bullish trend in the market. Similarly, the stochastic oscillator is at the overbought (OB) territory, making a new higher high. However, this high is not reflected in the JP225 price action thus increasing the chances for a bearish divergence. If we add the convergence of the SMAs, then there is an increasing probability for a sizeable move in the JP225 index.

If the bulls manage to retake the market reins and clear the 38.2% Fibonacci retracement level of the March 8 – August 17 uptrend of 27,423, their first target would be the 23.6% Fibonacci retracement of 28,113. Higher, the twin highs of 28,394 and 28,682 could prove tougher to clear.

Should the bears manage to break the trifecta of SMAs, they could face strong support at the 50% and 61.8% Fibonacci retracement at 26,866 and 26,308 respectively. Even lower, the busier 25,791-25,972 area could be targeted.