STOCKS
Dow (24813.69, +0.72%) has tried to move up again towards 24800-25000 resistance levels. Note that a break above or rejection from these levels would be crucial to drive the next course of movement. A break above 25000, if seen would be very bullish for the medium term targeting 25500-25750 while a rejection from 25000 could take it down to 24000 levels.
Dax (12770.75, +0.37%) rose initially but closed in the red. The index could be stuck in the 12900-12500 region for the coming sessions. Important resistance is near 13000-13050 levels and could hold in the medium term to push back the index towards 12500 in the longer run.
Nikkei (22482.85, +0.031%) is headed towards resistance near 22800 and could come off from there in the coming sessions. Overall long term looks bearish but a strong rejection from 22800 is yet to materialize.
Shanghai (3083.82, -0.24%) is trading above 3050 and looks stable for now. Some range-trade in the 3050-3100 region is possible for the near term. A break above 3150 or below 3050 would determine the next course of directional movement. Till then the index is likely to remain in sideways consolidation.
Nifty (10628.50, -0.63%) fell sharply towards our expected 10600-10550 levels. Some more downside towards 10500 is possible in the coming sessions before the index pauses. Sensex (35011.89, -0.61%) also came off sharply and could test immediate support near 34750. The stocks closed lower yesterday, dragged by the financials and amid caution during the RBI’s 3-day interest rate setting meeting. The indices could trade lower today also followed by a bounce back by the end of the week.
COMMODITIES
Brent (75.50) has immediate support near 75 and then at lower levels of 74. While these supports hold, we may not see a fall below 74 in the near term and the price may bounce back in the next few sessions towards 77-78.
WTI (65.06) has broken immediate support near 66 on the daily candle chart and while the price trades lower, a test of 63.0-62.50 is possible in the medium term. WTI looks more bearish than Brent just now and in case WTI continues to fall sharply, it could drag Brent also to lower levels.
Gold (1292.04) looks bearish while below 1300. A test of 1270 looks possible on the downside.
Copper (3.1274) has risen and is testing immediate resistance on the daily candles. If this holds, the price could again fall back to 3.05. Else a sharp break on the upside, if seen would be bullish towards 3.15-3.20 levels in the medium term. A rejection from current resistance looks more probable.
FOREX
Dollar index (94.08) almost touched the 21 days MA near 93.6 by seeing a low of 93.66 yesterday. However it quickly rose back again, above support trendline on daily candles near 93.8-94.0. It has been trading below 94.25 for the last 3 sessions but could now move higher than that towards 95. Repeating yesterday’s comment: the upside / downside levels for the Dollar Index which, when broken, could confirm bullishness / bearishness in the medium term could be 95.5-96.0 and 93.5-93.0 respectively.
Euro (1.1689): Euro also came close to testing the 21 days MA near 1.176 (as it saw a high of 1.1745). However it again fell to levels below 1.17. It might dip lower over today-tomorrow to levels near 1.163 (as the Dollar Index possibly moves higher towards 94.5). Repeating yesterday’s comment: The upside / downside levels for the Euro which, when broken, could confirm bullishness / bearishness in the medium term could be 1.178-1.182 and 1.140-1.135 respectively.
Dollar Yen (109.88) has broken resistance in the downward channel on daily candles near 109.6 and has seen a high near 109.99 already. The 21 days MA near 109.7 could still provide some resistance. But if the Dollar Yen stays above 109.7, it could well go on to test previous highs near 111.40. On the downside, only a break of 108 would confirm medium term bearishness.
Euro Yen (128.46) is only moving higher after testing support in downward channel on weekly candles last week. With Dollar Yen seeming bullish, Euro Yen could well move even higher towards 129.5 (seen as crucial resistance level on weekly candles). After a test of 129.5, Euro Yen should dip.
Pound (1.3307): As expected, Pound saw a high near 1.34 yesterday but closed lower near 1.342 (thereby respecting resistance on daily line chart). It could now move lower towards 1.32 in the next 1-2 sessions. We have been expecting Pound to gradually downtrend towards 1.30 (support on weekly candles) in the coming weeks. A break of 1.30 could imply continued bearishness in the medium term.
Dollar Rupee (67.115) : Dollar-Rupee may rise to 67.35-50 over the next few days, which is a super-crucial Resistance. Whether that breaks or holds will set the trend for the medium term.
INTEREST RATES
Last Friday, a strong jobs report and wages data in USA had led to a rise in US Yields, taking the 10 Year yield above 2.9%. Next week might see significant movement in US yields as there are some key data releases (like the US CPI) and also the FOMC meeting. Given that a rate hike is more or less certain and would already have been factored in, a significant rise in yields due to the expected rate hike might not take place.
Our May ’18 US Treasury report ( available on demand ) forecasts a near term dip in US yields towards medium term supports near 2.55% (10 Year), 2.9% (30 Year) and 2.2% (5 Year). Dips towards these levels would require some indications of dovishness from the US Fed in next week’s meeting. Let’s wait and watch.
Current yields: US 10 Year (2.937%), 30 Year (3.079%), 5 Year (2.79%), 2 Year (2.51%)
The US 10 year yield has risen above earlier support trendline on short term chart near 2.90% and did not get resistance from it as we had expected. It is still testing support on medium term chart and could rise some more from here towards 2.97%. The EU Retail sales data later today could have some bearing on German yields, which in turn could also directly impact US Yields
