STOCKS
Dow (23857.71, -1.43%) had attempted a rise from 23500 but could not sustain. The index fell back to 23700 yesterday, re-testing the near term support. Watch price action here as a break or bounce from current levels would decide the further course of direction.
Dax (11970.83, +1.56%) did bounce back from 11700 as expected but does not show signs of bullishness just now. Although there is scope on the upside towards 12200-12300 levels, Dax could see a dip from 12050-12100 levels itself again heading back towards 11800-11700 region. Watch price action near current levels.
Nikkei (20939.59, -1.77%) opened at lower levels today after the sharp rise to 21317 yesterday. Currently trading below 21000, Nikkei could be stuck in the broad 21200-20200 region for the near to medium term.
Shanghai (3147.91, -0.59%) opened with a gap up with an attempt to rise higher yesterday but has come off from there again to levels below 3150. If a rise does not take the index back above 3200, the index could gradually lose its upside momentum leading to a medium term sideways consolidation.
10220-10260 could be a decent resistance zone just now which could push Nifty (10184.15, +0.53%) to lower levels. Some stability is possible today likely to end the month below 10260.
Sensex (33174.39, +0.33%) is also likely to come off from 33500, the immediate channel resistance as seen on the daily candles. While that holds, April could possible begin with a dip in the index.
COMMODITIES
Brent (69.68) and Nymex WTI (64.77) are down as expected. WTI could head towards 64 before rising past 66.50 while Brent could come off to 69-68 levels.
Gold (1346) tested 1357 on the upside and came off from there in line with our expectation. A fall to 1340/1330 is possible before trying to move up again in the medium term.
Copper (2.9955) has come off from levels below 3.04 and while it trades lower, there could be chances of coming down to 3.95/90. Some consolidation is possible below 3.04 today.
FOREX
Dollar index (89.27) hasn’t yet decisively broken the crucial long term support on weekly line chart near 89.2-89.4. If this support is broken the Dollar Index could turn bearish in the medium term after having ranged in the 88.5-91.0 region for the past 10 weeks. The next downside target would be horizontal support near 88.5 on daily candles. The US GDP data release today could be important – a favorable GDP growth figure could be positive for Dollar strength.
Euro (1.2417) – As mentioned yesterday, there is crucial long term resistance near 1.245 on the weekly line chart which might be pushing the Euro down. A breach of this level would be bullish for the Euro and it could then target 1.255-1.26, seen as horizontal resistance on 3 day candles.
Dollar Yen (105.57) , as predicted yesterday, was pushed down by immediate resistance near 106 on the daily candles and could move down towards 104.5 again by end of this week / early next week.
Euro Yen (131.05) – could slowly move downwards on daily candles towards 130 by the end of this week / early next week, after having tested resistance near 131.75-131.80 yesterday.
Pound (1.4187) saw an unexpected low near 1.4066 yesterday but has stayed within the upward channel on daily candles. As we wrote yesterday, there could be a dip to 1.415-1.41 in the next couple of days (seen as support on daily candles), after which it could again rise, targeting 1.43 by early next week.
Dollar Rupee (64.98) – can test 65.25 and then come off from there.
INTEREST RATES
US yields fell below crucial levels yesterday as investors seem to be shifting away from volatile equity markets into safer debt. This is in line with our expectation of a slow decline in yields, which might continue through Apr-May.
Almost 300 billion $ worth of Treasury debt auctions are underway this week, which could possibly raise yields – we need to watch out for this.
US 10 Yr Yield (2.78%), 30 Yr (3.035%), 5 Yr (2.58%), 2 Yr (2.27%) :
The 10 Year yield instead of rising towards channel resistance near 2.88%-2.90, has dipped slightly below support (near 2.8%). Yesterday we wrote that there is a possibility for 2.75% to be tested in Apr ’18 – this could possibly happen in early April if the treasury auctions this week do not raise yields.
The 30 yr yield has dropped to support near 3.04%. We wrote yesterday that a dip from 3.1% could create a downward channel for the 30 Yr yield – we need to see till the end of the week if the same gets confirmed.
The 5 year yield has broken below crucial support near 2.6%. Let’s see if the auctions can raise it back up into the horizontal channel.
