STOCKS
Globally indices are looking bullish for the near term.
Dow (26049.64, +1.01%) and Dax (12538.31, +1.16%) have both moved up sharply yesterday. The indices look bullish for the near term. Dow could rise towards 26300 while Dax may move up towards resistance near 12650.
Nikkei (22934.68, +0.59%) has risen past the initial resistance near 22800 and this rise if sustains could validate the possible shoulder-Head-Shoulder pattern formation indicating further bullishness for Nikkei in the near term. While above 22800-22850, Nikkei is bullish towards 23500. This could also mean bullishness in Dollar-Yen in the near term.
Shanghai (2783.95, +0.11%) has also risen and while above 2750, the index could be bullish in the near term towards 2800-2850 levels.
Nifty (11691.95, +1.17%) is also bullish towards 11800 while above immediate support near 11600. But note weekly candle resistance just at current levels.
COMMODITIES
Crude prices look bullish in the near term on expectations that weekly US inventory data will show a decline and sanctions on Iran will impact supply. Brent (76.29) and Nymex WTI (68.92) can move up towards 78 and 71-72 respectively. Note that 78 on Brent is a crucial resistance and is likely to hold in the medium term.
Gold (1215.40) is bullish while above 1211 and can rise up towards 1230/40 in the medium term. Overall view is bullish.
Copper (2.6955) looks stable just now. If the Chinese Stock index moves up sharply, then the downside for Copper could be limited and it could move towards 2.85. Else if the price falls below current levels, we could see a test of 2.65/60 in the coming sessions.
FOREX
Watch out for crucial resistances on Euro @ 1.1675-1.1700 and on GBPUSD @ 1.2872 – if breached, maybe Dollar weakness could extend for few more sessions.
Euro (1.1676) Euro is testing resistance near 1.1675 on daily candles. Above this level, on the weekly candles, previous support trendline might also give some resistance near 1.175 – also corresponds to the 21 weeks MA. While below 1.176, the medium term preference remains bearish.
Dollar Index (94.84) is testing support on daily candles near 94.80. If it breaks this support, it could fall more towards 94.3 in the near term before rising from there.
Dollar Yen (111.30): Dollar Yen looks bullish towards 113 in the next 2-3 weeks. The next 1-2 sessions could see a rise beyond 111.50 with levels near 112 being tested by the end of the week.
Euro Yen (129.96): On daily candles, Euro Yen has breached resistance near 129.75. Looking at possible rises in Euro and Dollar Yen towards 1.175 and 112 in this week, we could see Euro Yen breach resistance near 130 on other charts. The July high of 131.99 would then be a crucial resistance level.
Pound (1.2875) is trading just above crucial resistance provided by the 21 days MA at 1.2872. If it breaches this MA decisively, then we could see an upmove towards higher resistance near 1.3000-3050 in this week / max by next week.
Dollar Rupee (70.1625) : Might dip to 69.90 today. May have Support at 69.90 or deeper down in the 69.70-50 region. Offshore NDF quoting @ 69.98.
INTEREST RATES
Progress on a trade deal between US-Mexico led to a slight rise in US yields. Earlier last week, the US Fed Chairman’s comments in the Jackson Hole Conference led some analysts to interpret that a December rate hike by the US Fed might get delayed to 2019. We need to watch out for whether this belief grows stronger in the markets – if it does, then the May high of 3.125% for the US 10 year yield would be confirmed as the year’s top.
US 10 Year Yield (2.85%) : The support near 2.82% still remains strong. A breach above 2.9% would be required for another test of 3%. Current preference is however bearish for the near term.
German 10 year yield (0.38%): As expected, it is rising towards resistance near 0.4% on medium term chart (current preference is for 0.4% to not be breached – probably a gradual downtrend towards 0.18% could happen).
German-US 10Yr Spread (-2.47%) is rising towards -2.45% – this is a crucial resistance level for the spread, which if breached, could make the spread bullish in the medium term – current preference is for the resistance to not be breached.
