One of the key stories this week continues to be the sell-off in the Nikkei as it followed up its sharp decline on Wednesday, with second leg down today. Looking at the RSI the pair is quite overstretched, and shows a bullish divergence.At the same time, we are below all the key moving averages, and the 200-EMA (in gray) and the 55-EMA (in blue) both held price as resistance levels.The initial area of support near 1,280 failed, and now we have fallen down to a pivot dating back to October 8th. If it too fails to provide support, then we may be looking at a move down to 1,3925, which would close a gap we had in the index from early October. However this would require a quite bearish macro development - and so far the decline has been driven primarily by a rise in Shibor, a Chinese lending rate. What happens next in the Nikkei225, as always, will be key to the JPY pairs, so keep your eye on news stories from China, and reaction in this key index come the start of next week. - Nick