STOCKS
Dow (25058.12, -0.025%) is holding below immediate resistance near 25250 and while that holds, we could see some correction in the near term towards 24750.
Dax (12561.42, -0.98%) also saw a sharp fall from levels near 12800 instead of rising further towards 13000. Levels near 12400 could produce a small bounce in the next few sessions, again taking the index towards 12800-13000. For now, the correction could continue for another 1-2 sessions.
Nikkei (22403.45, -1.30%) was unable to rise above 23000 last week and instead has come off in line with the movement in the other equity indices. While immediate support near 22400 holds, the index may soon bounce back to higher levels in the near term. Trade within 22400-23000 is possible in the coming sessions.
Shanghai (2836.02, +0.24%) has risen from 2750 and while the rise sustains, the index needs to break above 2850 to turn bullish for the near to medium term. A break above 2850, would open up chances of a rise towards 2900-2950 in the medium term.
Nifty (11010.20, +0.48%) was stuck in the 11100-10900 region last week without any major movement. A break on either side this week would indicate on further direction on the Nifty. A rise towards 11150-11200 looks more likely while above 10900-10950 levels.
COMMODITIES
Nymex WTI (68.10, -0.23%) has some more room in the downside towards 65 and if the price falls, it could drag Brent (72.85, -0.30%) also to lower levels in the next few sessions. Note that 70-71 is an important support region for Brent and is likely to hold in the medium term.
Gold (1231.90, +0.06%) has bounced sharply from 1210 but could face some resistance near 1240. If rejection is seen from 1240, Gold could continue to looks bearish for the near term with a possibility of testing 1200 in the medium term. A rise above 1240, if seen in the current rally would be bullish for the longer term.
Copper (2.7465, -0.34%) is stuck in the 2.68-2.80 region and a break on either side is needed to bring in the next leg of movement. A break above 2.80 would open up chances of testing 2.95-3.00 again in the coming sessions; else some range trade in the 2.80-2.68 region is possible.
FOREX
Euro (1.1739): Euro has moved past resistance near 1.1715 and is now trading near higher resistance on 3 day candles near 1.174-1.175. A breach of this level could take it up towards 1.185 (previous high). However if 1.175 holds, Euro might again dip towards 1.16 to continue its ranging. A break out from the range in either direction seems likely in the coming 1-2 weeks. Currently, the preference is shifting towards the upside.
Dollar Index (94.296): Dollar Index is breaking support on daily and 3 day candles near 94.5. It has lower support near 94 on daily line chart which it could test in the next 1-2 sessions. A test of 94 by Dollar Index could correspond with a test of 1.18 by Euro.
Dollar Yen (110.94): Against our expectation, Dollar Yen has seen a sudden downturn and is close to crucial support near 111 on daily candles. The strength in Yen might have been a result of the rise in Japanese bond yields (see Interest Rates below). If Dollar Yen breaks below 111 decisively, then 113 might be a medium term top and it might become bearish here onwards.
Euro Yen (130.24): Euro Yen has dipped along with Dollar Yen and could test support on daily candles near 129.50 in the next 1-2 sessions. Below 129.50, there is strong horizontal support on weekly line chart near 127.
Pound (1.3142): After testing channel support on daily candles near 1.295 last week, the Pound is gaining strength and could move towards 1.32 in the next 1-2 sessions. The broader trend currently looks bearish. A decisive break below the 89 weeks MA on weekly line chart would confirm bearishness in the medium term.
Dollar Rupee (68.70): Dollar Rupee opened at 68.7050 today (as was forecasted in Friday’s evening comments). There is support near current levels which could push it back up towards levels near 69. However current preference is for a break of this support.
INTEREST RATES
Japanese yields have shot up with the 10 year yield seeing a high near 0.09%. This has happened due to speculation that the Bank of Japan might be contemplating to modify its interest rate targets. Till now the BoJ had been ensuring that the 10 year bond yield doesn’t breach 0.10%-0.11%. On the short term chart, the Japanese 10 Year yield (0.075%) has breached resistance trendline near 0.05% and might stay above this level in the days to come.
US yields also rose on Friday inspite of Trump again expressing his disapproval towards the Fed’s tightening. The rise in US Yields and Japanese yields might be linked – investors might have moved out of US bonds and towards Japanese bonds, leading to a rise in yield for US bonds.
US 10 year yield (2.89%), 30 Year (3.023%), 5 Year (2.763%), 2 Year (2.5952%):
As mentioned previously, a breach above 2.9% for the US 10 Year yield could negate the downside possibility of a test of 2.70%-2.65% in the next 1-2 months. Recent US economic data releases have also continued reflecting a strong US economy, which would be helpful for a rise in yields. The talk around the US-China trade war could still be the primary market mover for yields in the weeks to come. Any increase in the rhetoric would be supportive for a fall in yields.
