Nikkei 225 Trapped Between Two TrendsJapan 225 CFDFOREXCOM:JP225FOREXcomThe Nikkei 225 remains trapped between a well-defined downtrend that's been in place since early June and a minor uptrend that emerged following the July lows, leaving price compressed into an increasingly tight range. Bulls have had plenty of opportunities to wrestle back control, but they've repeatedly come up short. There have been numerous false breaks above the downtrend since it was established, including one yesterday that quickly reversed lower. We're seeing another probe today that's also faded back beneath the trendline, highlighting the need for confirmation before chasing the upside. To turn constructive, I'd want to see a convincing close above the downtrend, preferably accompanied by a break above the 50-day simple moving average at 67,108. Some traders may even prefer to wait for a push through 67,590, the July 22 high, and see that level hold before considering longs. That would open the door to targeting 69,390, the July 10 swing high, with a stop tucked beneath either the 50-day simple moving average or the former downtrend, depending on your preferred risk-reward. If buyers can successfully clear 69,390, 70,000 and 72,000 become the next levels of note. While they're more psychological than technical resistance, they may still influence price action before attention shifts to 73,520, the June record high. The bearish case comes into play if we see another rejection from the downtrend followed by a close beneath 66,000. That would weaken the bullish setup, strengthen the bearish bias and increase the risk of a retest of the July 17 swing low around 62,750, with 62,400, the June 11 swing low, another obvious downside target. Traders looking to play that move could consider shorts on a confirmed break beneath 66,000, using a stop back above the level for protection. Momentum indicators are offering little help. RSI and MACD had been pointing to fading bullish momentum but have since shifted back towards neutral, leaving price action as the key signal to watch. Good luck! DS