The steep -909.75 pts, or -3.08% decline in Nikkei earlier today looks rather scary. Yet, overall outlook isn’t that bearish yet. The index is still holding in the triangle pattern from 30714.52 high. It’s kept inside medium term raising channel, holding well above 38.2% retracement of 22948.47 to 30714.52 at 27747.88. Hence, the long term up trend remains intact.
At this moment, deeper pull back cannot be ruled out based on global market development. We’d believe that 27747.88 fibonacci support is the key to level to defend. Medium term outlook will stay bullish as long as it holds. But a firm break there would argue that a medium term correction is already underway.