STOCKS
Dow (21012.42, +0.36%) has moved up in line with our expectation and has entered the near term resistance zone of 21000-21200 and could come off in the near to medium term after some more rise in the next few sessions. A small dip to 20000 is also possible in the near term.
Dax (12642.87, -0.13%) is almost stable and could trade in the 12725-12485 region in the near term. Sideways consolidation is possible before we see a rise towards 12800.
Shanghai (3060.97, -0.10%) is in a down channel and looks bearish on the daily candles but while it trades above important support near 3020 (visible on the 3-day and weekly candles), we could see an attempt to bounce back towards 3090-3100 in the coming sessions.
Nikkei (19849.10, +0.54%) has moved up and is headed towards resistance at 20000. While Dollar-Yen and the US-Japan 10Yr yield spread are moving up, we could expect an upmove in Nikkei too in the near term. Immediate resistance at 20000 is expected to hold just now.
Nifty (9360.55, -0.27%) closed almost closer to our immediate support levels near 9350. In case 9350 breaks on the downside, we could see a fall towards 9250-9200 in the medium term.
COMMODITIES
While Dollar Index had failed to hold it’s gain above 97 levels, Bullion has strengthened again against Dollar yesterday. Gold (1257) and Silver (17.19) are trading well above their crucial support at 1247 and 16.93 respectively. But we would like to be on selling side while gold is trading below 1280 and silver below 17.50 levels due to their short term overbought condition.
Copper (2.58) has found resistance at 2.62 levels. Only above 2.62, higher resistances of 2.68-72 can come into consideration. In the medium term 2.55 are going to be a strong support now but a close below that could open up 2.44-35 levels as well.
Brent (54.50) moved higher and hovering around its crucial resistance of 54.60 which is a significant move for the energy markets. WTI (51.82) is also trading above its major resistance of 51.20. Both of them have tested and bounced a bit from their respective support areas due to a huge decrease (-4.4 MB) in U.S weekly crude oil inventory. Immediate trading range for Brent and WTI could be 53-54.60 and 50.50-52.40 respectively. The only concern is the short term overbought condition though the downside possibly limited to 51.80 for Brent and 49.30 for WTI.
FOREX
Dollar Index (96.94) was rejected exactly from our resistance of 97.45, increasing the chances of seeing 96.50-00 in the next few sessions. 97.45 becomes a significant resistance and near term reversal point, below which the bears remain in total control.
Euro (1.1242) cashed on the weakness of Dollar as it bounced back from the previous swing low of 1.1160. The journey towards the target/resistance of 113.00 may have resumed. Repeat – if any profit booking is seen in Euro either near 1.1300-30 or near the higher long term resistance of 1.1400-50, then corresponding short covering can be expected in Dollar near 96.50 or 96.00.
Dollar Yen (111.53), unable to sustain above the resistance of 112, returned inside the range of 110-112 and may continue moving sideways in the broader range of 111.50-114.00 with no strong directional intent.
While the chances of a sudden sharp rise towards 1.32 can’t be ruled out yet, at the moment Pound (1.2983) is showing a lot of inertia as it continues to grind in the range of 1.2900-1.3100. No weakness as such above 1.2900.
Aussie (0.7509) bounced almost exactly from our support of 0.7430 but not higher than 0.7550 is expected right now. Some selling pressure can be expected from 0.7540-50.
Dollar Rupee (64.74) came down from 64.95, well short of our expected higher target/resistance of 65.10-25. Still no clarity as bidirectional possibilities prevails. From a larger perspective, it must also be noted that the bearish momentum of the major downtrend remains intact below 65.25.
INTEREST RATES
The US yields came off slightly yesterday but overall looks bullish in the near term while immediate supports hold. The 10-5Yr differential (0.47%) has moved up sharply and could head towards 0.475%-0.50% in the near term indicating that the 10Yr could rise faster than the 5Yr in the next few sessions.
The Japan-US (2.21%) looks bearish in the medium term charts and in case it moves down towards 2.1-2.0%, we could see some downward correction in Nikkei and Dollar Yen too. This could be in line with the resistance near 20000 on Nikkei.
The Japanese yields look bullish in the near term. the 10YR (0.05%) and the 30Yr (0.81%) may head towards 0.1% and 0.84% respectively.
The UK yields are falling and may test support levels in the near term. The 10Yr (1.07%) could bounce back from 1% while the 20Yr (1.61%) may head lower towards 1.5%.
