STOCKS
Bears are still hovering around ready to take control in Shanghai, Nifty and Nikkei. Dax and Dow has supports below current levels and would have to see some range trade before attempting to move up.
Dow (25317.41, -0.50%) was dragged lower as energy and financial stocks declined in yesterday’s trade. We continue to hope that the support at 25000 may hold, limiting the downside scope for Dow in the longer run. But, failure to hold above 25000 would open up chances of testing 24000 levels on the downside. Dow is likely to trade above 25000 for at least this week and the next. Preference is for a bounce from 25000.
Dax (11524.34, -0.26%) dipped back again after trying to rise above 11600. As mentioned yesterday, support near 11300-11400 may hold in the near term eventually pushing back the index to higher levels.
Nikkei (22200.53, -1.83%) has been trying to move back to levels above 22400 but is unable to sustain at higher levels. The index has again fallen back towards 22200 and while the struggle to move up continues, the bears could take over leading to sharp fall in the coming sessions towards 21500-21000. Sentiment remains bearish while below 22200.
Shanghai (2635.53, -0.73%), after bouncing back well from support near 2450 could now head towards immediate resistance near 2750 and would find it difficult to break on the upside on first attempt. Channel downtrend is holding for now as seen on the 3-day candle chart and while 2750 holds, another dip is possible from there by next week. Near term looks bullish followed by a fall back towards 2600.
Nifty (10245.25, -0.57%) has weekly support at 10200 and lower support on the 3-day candle chart at 10000. These supports are crucial in the medium term and could well produce a bounce back towards 10800-10900 in the longer run. For now, we consider a scope of testing 10000 on the downside before starting to move up again.
COMMODITIES
Precious metals and Copper is stuck in the small narrow range while Crude prices may find some support below current levels.
WTI (69.23) has immediate support on the weekly candles and a bounce back towards 74-76 levels looks likely in the near term.
Brent (79.55) on the other hand has some more room on the downside towards 76 which is likely to be tested before a bounce is seen. Overall crude prices look bullish for the medium term while the mentioned supports hold.
Gold (1226.50) is stuck in the narrow range above 1210/20 levels and could probably remain so this week. 1240 is an important immediate resistance on Gold and could possibly push the prices back towards 1210. But in the longer run, a break above 1240 is needed to initiate the bullish momentum taking the prices towards 1250+.
2.70-2.83 is the trade zone for Copper (2.7755) for the next 5-6 sessions. Sideways consolidation is likely to continue for some more time with an eventual break on either direction thereafter initiating a sharp move. A break out on either direction would be accompanied by similar movement in the Chinese Stock prices and Aussie.
FOREX
Pound has broken below 1.30 and could target 1.28 in the next 1-2 weeks. Watch crucial supports near 1.141 and 0.704 on Euro and Aussie. Watch resistance near 73.60 on USDINR.
Euro (1.1462) came off from resistance near 1.155 yesterday and could move lower towards support on 3 day candles near 1.141-1.142 in the next couple of sessions.
Dollar Index (96.016) – Contrary to our expectation, Dollar Index has again moved up and is now close to resistance near 96.20-30 on 3 day candles. A break above this resistance could potentially be bullish in the next 1-2 months.
Dollar Yen (112.57) – While above 112.5, it could rise towards the 21 days MA at 112.96, which could provide some near term resistance. Support near 112.0-112.2 would have to break, for us to start looking at the downside.
Euro-Yen (129.03) saw a false break yesterday above resistance trendline on daily candles and is now again trading below the resistance near 129.40. It continues to look bearish and could test 128.5 in the next 1-2 sessions. Over the next 2-4 weeks, a test of 127 (support on weekly candles) is possible.
Pound (1.2967) has broken below support at 1.30 on daily candles. While below 1.300-1.302, it could move lower to test levels near 1.29 in this week. It could target support on weekly candles near 1.28 in the next couple of weeks.
Aussie (0.7069) – Contrary to our expectation of a rise towards 0.715, Aussie has fallen below 0.71 and could test support near 0.705-0.704 in today’s session. As we have been saying, 0.705-0.704 is a crucial long term support level, which if broken, could be very bearish for the Aussie.
Dollar Rupee (73.56): Support at 73.20 is holding well. Another attempt to re-test 73.20 could be seen over the next couple of sessions. Else, a break above 73.60 on the upside could take it higher towards 73.80.
INTEREST RATES
India 10 year yield (7.93%) : While above 7.90%, it could rise towards 8% in the near term. A break back below 7.90% would however open up support near 7.80%-7.75%.
The US 10 Year (3.18%) : Repeating yesterday’s comments: Support to watch out for is now slightly higher near 3.17%. While above that, there are chances of a rise towards the previous high of 3.25%-3.26%. A break below 3.17% could take it towards 3.10%. –
10 Year German-US spread (-2.73%) is likely to fall towards long term support near -2.80%. A break below -2.80% (if it happens) would be very bearish.
2 Year German-US Spread (-3.49%) has room to fall further towards -3.56% to -3.60% in the near term.
German 10 year yield (0.45%) – Repeating yesterday’s comments: While below 0.55%-0.60%, it could fall towards support near 0.35%-0.30% in the near term. A break of 0.30% (if it happens) would be very bearish.
