STOCKS
Dow (21082.95, +0.34%) has moved up exactly as expected. Now we need to see if it is able to break above 21200 or comes off sharply from there to re-test 21000 or lower in the near term. Note that 21200 is an important resistance to keep an eye on. A sustained break above 21200 could turn very bullish towards 21400-21600 in the long term.
Dax (12621.72, -0.17%) fell yesterday and is trading sideways within the 12700-12500 region for now. Trading exactly in the middle of the broader 12400-12900 region, there is equal chances of moving in either direction. We will have to wait and watch for some confirmation.
Shanghai (3109.25, +0.05%) has risen sharply breaking the immediate resistance on the daily charts, while the support on the 3-day charts has held well producing a bounce in the last few sessions as expected. There is enough room on the upside towards 3200 in the medium term.
Nikkei (19762.11, -0.26%) could possibly remain sideways within 20000-19600 region as mentioned earlier. Thereafter if resistance near 20000 holds, there could be a sharp fall towards 19200 or lower; else a sustained price confirmation above 20000 is needed to initiate further bullishness.
Nifty (9509.75, +1.59%) faced sharp bounce from levels just above our mentioned 9350 support. But also note that 9525 is an important immediate resistance and on a break above 9525-9530 only, we may become more bullish towards 9700-9800 on a longer term; else a fall back towards 9350-9300 is possible in the near term.
COMMODITIES
Muted price action has been seen in Gold (1256). If 1249 holds on a closing basis then sideways consolidation within 1249-1280 continues. Thus we need to keep a close watch on the price action in Dollar Index which could give some cue on further Gold direction. But we will remain bearish while it is trading below 1280 levels and a close below 1249 could open up 1230 levels as well.
Similar kind of trading pattern has been seen in silver (17.15) also. It is trading above 17 levels, thus a possibility of a sideways movement between 16.90-17.50 levels can’t be ruled out.
Copper (2.58) is hovering around between 2.55-2.60 for last few days . 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.
We had clearly mentioned in our yesterday’s morning briefing that “The only concern is the short term overbought condition though the downside possibly limited to 51.80 for Brent and 49.30 for WTI”. Yesterday Brent (51.50) fell $2.51, nearly 5% and WTI (48.88) was down by $2.45. Immediate trading range for Brent and WTI are 51.20-52.80 and 47.43-49.51 respectively.
FOREX
Dollar Index (97.27) held previous day’s low to recover to a minor degree but the corrective bounce can reach 98.30 at best if it manages to break and sustain above the interim resistance of 97.45. Our downside target of 96.50-00 remains unchanged.
Euro (1.1196) is seeing a normal correction while the larger uptrend remains intact so far. This correction can take it to 1.1100-1.1075 where fresh buying can be expected again.
Dollar Yen (111.56) is almost stable and has not been able to break above 12 in the last 3-sessions. But while above important support at 110, there is scope for an upmove towards 114.0-114.5 in the medium term. We could possibly see a sideways consolidation for a few sessions before a sharp directional move is seen.
Pound (1.28890) is trading above support near 1.2865 and while that holds, a rise towards 1.32 cannot be ignored. Downside could be limited to 1.2750 in the next 2-3 sessions while an up move towards 1.3250 is still on the cards.
Aussie (0.7432) is trading lower and could possibly come off towards 0.74 or slightly lower in the near term.
Dollar Rupee (64.61) could remain stable within 64.90-64.50 today and while immediate resistance of 65.00-65.20 holds, the possibility of further Rupee weakness seems less.
INTEREST RATES
The US yields are almost stable but are trying to slowly inch up towards higher levels. There is some potential for an upmove in the near term.
The German-US 10YR (-1.88%) has come off from resistance at -1.83% and while that holds, the yield spread could come down in the near term.
The German yields by themselves are trying to move up slowly and looks bullish in the near term.
The UK yields are down and heading towards medium term support levels. A bounce thereafter could be possible by another 2-3sessions.
The Japanese yields on the other hand have fallen in the last 2-sessions and could test the earlier resistance turned support before again bouncing back in the longer run.
