STOCKS
Bulls have done some hard work last week to pull the Global Equity markets up a bit. Price action this week might be a little more consolidative, as the market tries to figure out whether it wants to become really bullish (on chances of a US-China thaw) or not. Or at least, the speed of the rallies may slow down a bit. Within that, the DAX and the Nikkei might outperform USA and India. China could be bullish despite the trepidation.
The Dow (26797.46, +69.31, +0.26%) held below the Resistance at 26900 (Daily Candles and Monthly Line chart) mentioned on Friday morning. A break thereof, if seen, can propel it up to 27500, but first we might see a dip to 26400-300.
The Nikkei (21305.89, +106.32, +0.50%) is testing the Resistance at 21350 on the Daily Line chart and might break above it to test Resistance at 21500-550 on the 3-day Candles.
Decent rally in the Shanghai (3013.03, +13.43, +0.45%) since the beginning of September, as the market has managed to remain above. However, we also have a crucial Resistance near 3100 on the Monthly Candles.
Good steep rally underway on the DAX (12191.73, + 64.95, + 0.54%) as it sustains above its 21-week MA (12110). It may move up a bit more to test 21325-350 Resistance on the Weekly Candles. The really crucial Resistance thereafter is seen in the 12500 region.
Indian stocks moved up a decent bit on Friday, but they continue to underperform the global indices. Although the Nifty (10946.20, +98.30, +0.91%) sustained well above 10800, it was unable to rise past the levels of 10977-10981. The Sensex (36981.77, +337.35, +0.92%) too rose almost 1% on Friday, but has immediate Resistance at 37157 (21-day MA). At the same time, it has Support near 36400 on the 3-day Line, which is not so prominently visible on the Nifty.
All in all, as mentioned in the beginning, although Indices have moved up well enough last week, they have key Resistances coming up nearby. As such, price action might be consolidative this week as the market would wait for further news, which could support/ refute the bullish hopes.
COMMODITIES
Gold and Silver have dipped further as expected and remains subdued. There is room left for them to dip further. Oil has risen and can move up to test its key resistance which will need a close watch. Copper is not gaining momentum to break above its key resistance and looks vulnerable to fall again.
As expected, Gold (1510) has declined further. Immediate resistance is at 1513 and cluster of resistances are poised in the broad 1520-1530 region while below which a test of 1490-1485 is likely.
Silver (18.15) has declined below is support at 18.5 and can dip to 17.90-17.85. A break below 17.85 can drag it to 17.60 and 17.5. Resistances are at 18.3 and then in the 18.50-18.60 region.
The resistance at 2.65 is holding well on Copper (2.62). As mentioned on Friday, inability to breach 2.65 can drag copper lower to 2.60-2.58 and avoid a further rise to 2.68. It will also keep the possibilities alive of it revisiting 2.55 and 2.52 levels in the coming days.
Brent (61.82) has risen and can test 62.30 while it remains above 61.30. A break above 62.3 can take it further higher to 62.95 and 63.05 in the coming sessions. Similarly, WTI (56.90) can test 57.45 and even 58.05 in the near term while it sustains above 56.55. 63.05 on Brent and 58.05 on WTI are crucial resistances to watch which can cap the upside on both.
FOREX
Dollar index is getting support at 98 but has to breach 98.55 to move further higher. Euro looks mixed and may oscillate between 1.10 and 1.1075 ahead of the ECB meeting this week. Dollar-Yen has dipped below 107 but continues to remain bullish for a rise to 107.5. Aussie remains strong and can retain its uptrend. USDCNY is sustains above 7.12 for now but can break it eventually and fall to 7.10. Dollar-Rupee can test 71.52-71.45 while it remains below 71.93.
Dollar Index (98.45) is getting support near 98 but at the same time it has to breach 98.55 to test 99 and 99.25 on the upside. It can consolidate between 98 and 98.55 for some time and a breakout on either side of 98 and 98.55 will decide the next move.
Euro (1.1026) looks mixed. It can oscillate between its support in the 1.1010-1.1000 region and resistances at 1.1060 and 1.1075 ahead of the ECB meeting this week on Thursday.
Though Dollar-Yen (106.88) is struggling to rise past 107 decisively, the view remains bullish. Strong support is in the 106.65-106.60 region and then at 106.50. While above these supports, a rise to 107.5 can be seen in the coming days.
EUR-JPY (117.86) has come-off below 118 and has a key support at 117.5 which has to hold to keep the possibilities alive of the cross testing 118.5 and 119 on the upside. We expect 117.5 to hold and see a rise in the near term.
Aussie (0.6853) has risen above the crucial resistance level of 0.6845 and needs to see if it can sustain above it. The bias on the chart remains bullish and Aussie can move further higher to test 0.6885 and 0.6900 in the coming days.
Pound (1.2285) has come-off below 1.23 and can dip to 1.22 on a break below 1.2250. Broadly, Pound is expected to remains range bound between 1.22 and 1.2375 for some time.
USDCNY (7.1260) is holding above 7.12 but may face resistance in the 7.14-7.1450 region. While below 7.1450 we expect it to break 7.12 and fall to 7.10 in the coming days.
Dollar-Rupee (71.7250) fell breaking below 71.78 and has bounced from the low of 71.59 on Friday. 71.77, 71.81 and 71.93 are key resistances to watch while below which a test of 71.52 and 71.48-45 is possible in the near term.
INTEREST RATES
The US Treasury yields have dipped after the non-farm pay-roll data on Friday failed to meet the market expectation. The US added 130,000 jobs as against the market expectation for an increase of 150,000 in pay rolls. However, the Treasury yields have room to move slightly higher before resuming their broader downtrend. Similarly, the German yields can also inch higher in the near-term and then can reverse lower again. The 10Yr GoI looks positive in the near-term to test 6.63%-6.65%.
The US 2Yr (1.54%), 5Yr (1.43%), 10Yr (1.57%) and 30Yr (2.04%) though has dipped slightly on Friday can move up in the near-term in line with our expectation before resuming their overall downtrend. As we had mentioned last week, the 30Yr can test 2.09% and the 10Yr can move up to 1.65% and then can come-off again.
The German 2Yr (-0.88%) has dipped slightly while the 5Yr (-0.89%) and 10Yr (-0.64%) remained relatively stable. The 30Yr (-0.09) has moved up slightly and can inch into the positive territory to test 0.05% on the upside in line with our expectation. The 10Yr has resistance at -0.56% which can be tested this week before the broader downtrend resumes.
The 10Yr GoI (6.6025%) has bounced from 6.57% on Friday and looks bullish to test 6.63%-6.65% in the near term.
