STOCKS
Dow (24874.64, +1.77%) recovered sharply from levels near 24500 but closed just below immediate resistance near 25000. While below 25250-25000, the index could be tilted towards bearishness for the near term keeping chances of another decline to 24250 alive.
Dax (11287.39, -0.42%) was unable to sustain the bounce seen in the last couple of sessions. Some range trade in the 11400-11000 is possible before eventually moving up in the medium term towards 11600-11800.
Nikkei (21790, +1.55%) has risen sharply and if it manages to break above 21800-22000 could remain bullish for the coming sessions. At the same time we need to be cautious at weekly resistance near 22000.
Shanghai (2586.24, +0.71%) is likely to re-test 2650-2700 in the near term before facing rejection back towards current levels. Overall broad trade zone of 2700-2500 is likely to hold for the next 1-2 weeks.
Nifty (10198.40, -0.51%) dipped yesterday in line with the near term resistance near 10400-10300 region. While above 10000, we could see some range trade between 10400 and 10000. A break below 10000, if seen would turn bearish for the near term targeting 9700.
COMMODITIES
A rise in Dollar Index and recovery in the stock markets are negative for metals like Gold, Silver and Copper in the near term and have pushed prices lower. Also worry looms on a possible decrease in demand of metals from China due to the US imposed tariffs.
Resistance at 1240 is holding well on Gold (1222.20) pushing it back to our expected levels of 1220. Now if the fall continues, we could see a test of 1210-1200 again in the near term before the price re-attempts a rise back towards 1230-1240.
Silver (14.44) has broken below immediate support at 14.50 and could now come off towards 14 while the current fall continues. From 14, we could see a bounce back towards 14.50 or higher again.
Copper (2.6735) has also declined to test crucial support near 2.60-2.65 as mentioned yesterday. If 2.60 holds, we could see a bounce in another 2-3 sessions else a sharp decline towards 2.50 or even lower would come into the picture. For now preference is for a bounce from 2.60/65.
Both Brent and WTI are trading above long term support levels which if holds could soon produce a bounce by the coming week.
Brent (76.40) has immediate resistance at 77 on the daily candles and crucial long term support at 74-76 region. We could see trade within 74-77 levels in the next few sessions before a break on either side is seen.
WTI (66.44) also has important support in the 64-66 region and while that holds, a bounce in the near term looks possible.
FOREX
Watch 1.2662 on Pound and 0.705-0.706 on the Aussie. Both are crucial supports, which if broken, could lead to sustained Rupee weakness.
Euro (1.1344) could rise towards 1.1375-1.1400 from immediate support near 1.1325 in the next couple of sessions. After that, it could again come off towards 1.13.
Dollar Index (97.00) could face resistance anywhere between current levels and 97.25 in the next couple of sessions and could thereby come off towards 96.5-96.3, from where it could again rise.
Dollar Yen (113.15) has broken above 112.9 prior to the BoJ meet. We can now expect it to move higher towards resistance near 114.0-114.2 over the next 1-2 weeks.
Euro-Yen (128.36) could move up further towards 128.8-129.0 in the next couple of sessions before possibly coming off from there again.
Pound (1.2705) is testing crucial support at 1.27 on daily line chart. If it breaks below its Aug ’18 low of 1.2662 in this week, we could see it get very bearish in the weeks ahead.
Aussie (0.7080) : The support at 0.705-0.706 continues to stay strong for the Aussie. However while below 0.715, the possibility of the support breaking cannot be ignored. On weekly line chart, this level is seen as a crucial long term support, whose break could lead to sustained bearishness. Next few sessions could see a rise back towards 0.715.
Dollar Rupee (73.68) – Stay cautious on Dollar Rupee on a break above crucial resistance near 73.80. A decline could take it back towards 73.50.
INTEREST RATES
The US 10 Year (3.13%), as forecasted yesterday, has indeed moved up towards 3.13%. Infact, channel resistance might be slightly higher near 3.15%-3.16%, which could be tested over the next couple of sessions, before it comes off again below 3.10%.
The US 10-5 yr yield spread (0.17%) is trading at immediate resistance near current levels and if that holds the spread could come off towards 0.15% or lower in the coming sessions. This also suggests a possible downmove for the 10 year yield after 1-2 sessions.
Watch out for how the Japanese 10 year yield (0.12%) reacts after the BoJ meet today – where the Central Bank is expected to continue with its easy policy – it could lead to a further dip in the yield back towards 0.10%, which could then act as an important support level.
