The Jap225 index on the H4 time frame was in bullish territory from the beginning of May. However, bears did try to challenge their reign a few times but to no avail. This changed on 23 May when a last higher top formed at 31348. The bears got enough backing to start a shift in the market momentum.

A closer look at the Momentum Oscillator reveals a negative divergence between points “a” and “b” when comparing the tops at 30955 and 31348. This could have alerted technical traders that the bulls might be running out of steam.

Further confirmation of the increasing bearish presence in the market was displayed when the price broke through the 15 and 34 Simple Moving Averages with the Momentum Oscillator following suit by breaking through the 100 baselines into bearish terrain.

A possible critical support level formed when a lower bottom was recorded on 24 May at 30394.

If the bears manage to break through the critical support level at 30394, then three possible price targets can be set from there. Attaching the Fibonacci tool to the lower bottom at 30394 and dragging it to the resistance level at 31348, the following targets may be determined. The first target can be estimated at 30012 (161.8%). The second price target can be expected at 29822 (261.8%) and the third and final target can be estimated at 29440 (423.6%).

If the resistance level at 31348 is broken, the current scenario must be re-evaluated.

As long as the bears maintain the upper hand, the outlook for the Jap225 Index on the H4 time frame will remain bearish.