STOCKS
Dow (25964.82, -0.085%) is holding below resistance on the 3-day candles. Dow was closed yesterday. As mentioned in the previous edition, Dow could come off towards 25500 before again resuming its rise. Medium term looks bullish while the current downward correction is expected to be short lived.
Dax (12346.41, -0.14%) has support on the daily candles at 12000 and while that holds, the index could bounce back towards 12600-12700 in the near term. Test of 12000 is possible in the next 1-2 sessions followed by the mentioned bounce.
Nikkei (22715.09, +0.034%) is almost stable just now. But while below 23000, there is scope of falling towards 22400 in the near term. Although the weekly line charts looks bullish for the longer term, a dip towards 22400 is likely before the price starts to move up.
Shanghai (2722.26, +0.056%) has moved up a bit but overall trade in the 2650-2750 zone looks possible for the near term.
Nifty (11582.35, -0.84%) broke sharply, below the daily candle support. The resistance on the 3-day candle chart has held well and could turn bearish for the index in the next few sessions. A fall towards 11400 could not be negated in the near term. Dollar-Rupee moved up sharply above 71 towards the close of the session yesterday and while the Rupee weakness continues, Nifty could possibly come off in the near term and limit further upside just now.
COMMODITIES
Brent (78.07) is trading at resistance levels on the daily candle chart and these levels are very important. A break above this, if seen, could take the price higher towards 80 in the near term. Else a rejection from current levels is more preferred with a fall towards 76-75 in the next 4-5 sessions.
Nymex WTI (70.06) is stable but also has resistance in the 70-71 zone. While that holds, a small dip towards 68 is possible. Else the longer term charts look bullish with scope of a break above 71 and a rise towards 74 in the medium term. We wait and watch if a fall in Brent materializes as that could drag the WTI price also within next week.
Gold (1206.70) could trade in the 1200-1230 region with a possible extension to 1190 on the downside. Overall ranged or sideways movement could be seen.
Copper (2.6610) could come down towards 2.60-2.55 in the near to medium term. Immediate view is bearish.
FOREX
After a quiet day yesterday due to holidays in USA, Dollar could begin strengthening against the Euro and the Pound from today’s session.It might stay stable to weak against Yen. Dollar Rupee looks bullish towards 71.50-70 if 71.30 is breached.
Euro (1.1598): After seeing a quiet session yesterday (possibly due to holidays in USA), Euro might break below immediate support near 1.16 on 3 day line chart in today’s session. Lower support near 1.155 might be tested in the next couple of sessions, followed by a test of 1.15 later in the week/early next week.
Dollar Index (95.25) : After a quiet day yesterday, Dollar Index might rise towards interim resistance near 95.5 in today’s session – a breach of 95.5 is preferred in the next couple of sessions , which could thereby lead to levels near 96-97 in the next 1-2 weeks.
Dollar Yen (111.12): Dollar Yen has stayed stable near 111 after dipping from 111.75 last week. It could gradually drop towards crucial support near 110.5. If it breaks that, the 110.0-109.5 zone is also a crucial support zone. Only on a break below 109.5 will we abandon the view of bullishness towards 113 in the next couple of weeks.
Euro Yen (128.89): Euro Yen also stayed stable just below support on daily candles. As mentioned yesterday, it looks bearish towards lower support near 127.5-127.0 in this week. A test of levels near 1.155 by Euro-Dollar and 110 by Dollar Yen in the next couple of sessions implies a target near 127 for Euro Yen.
Pound (1.2861): Pound has dipped below 1.29 again, thereby negating chances of a rise towards 1.31. The break below 1.29 suggests it could be bearish towards support near 1.27 in this week.
Dollar-Yuan (6.8214) has crucial resistance near 6.83-84 and support near 6.80. While above 6.80, the resistance near 6.83 could be breached in the near term.
Dollar Rupee (71.215): Immediate resistance near 71.25-30 and higher resistance near 71.50 (could even extend to 71.70). Next 1-2 sessions look bullish. Correction after 71.50-70 likely (maybe next week).
INTEREST RATES
The Indian 10 year GOI (7.99%) saw a significant rise yesterday, breaking above crucial resistance near 7.95% – it now looks bullish in the near term.
Due to a holiday in USA yesterday, US yields have stayed stable near yesterday’s levels. Repeating yesterday’s commentary pertaining to US yields: USA and Canada couldnt reach a trade deal by the Friday deadline thereby dampening sentiments slightly. Moreover, there are murmurs that the US could impose trade sanctions worth $200 bn on China sometime this week itself. If that happens, it could be an extremely significant event -the impact on yields should most certainly be bearish, due to an enhancement of the ‘risk off’ sentiment.
We have been saying that chances of a Dec ’18 rate hike have slightly reduced over the past couple of weeks – this could imply that the May high of 3.125% for the US 10 year yield was the year’s top.
US 10 Year Yield (2.86%) : A breach above 2.9% would be required to negate the possibility of a downmove below 2.82% in this move. Current preference remains bearish for the near term.
The German-US 10 Year spread (-2.53%) has dipped from resistance near -2.45% and now looks bearish towards -2.6%. The German-US 2 Year spread (-3.22%) has also dipped from resistance near -3.20% and looks bearish towards -3.3% in the near term.
Japan 10 year bond yield (0.12%) is staying below important resistance near 0.13%-0.14% – if this resistance is breached, it would be a very important event and could lead to further bullishness in Japanese yields.
