STOCKS
Dow shows initial signal of a bullish breakout which if sustains could take it higher in the medium term. Dax is stable just now.
Asia Pac is up. Nikkei is trading at immediate resistance and could break on the upside while Shanghai is trading higher. Nifty is likely to move up.
Dow (25146.39, +1.40%) has broken above 25000 and could possibly move up above the interim resistance at 25250 also. This could be an indication of a sharp bullish break after a contracting zone (could be referred to as a triangle formation). The current rise, if continues could take the index towards 26000 in the coming sessions.
Dax (12830.07, +0.34%) looks a little dicey just now. Although there is some space on the upside towards 13000-13100, the index is unable to rise sharply and sustain at higher levels. While below 12900, the index could come down towards 12600 in the medium term.
Nikkei (22834.40, +0.92%) has also moved up and is trading just below trend resistance on the daily candles. If the resistance holds, the index could be pushed off towards 22400 again; else a sharp break on the upside could prove to be bullish for the medium term, thus also pulling up Dollar Yen to higher levels.
Shanghai (3121.58, +0.21%) is heading towards 3150 in the next few sessions. Watch price action near 3150. A break on the upside would be bullish else another dip back to 3050 is possible.
Nifty (10684.65, +0.86%) rose from 10550 support on the daily candles and while that holds, could move up to test 10750-10800 again on the upside. This could be the last leg of a near term rise within the 10550-10800 range. Thereafter a break on either side would set the direction for the long term.
COMMODITIES
Copper and Brent is bullish while WTI could see some pause or dip in the near term. Gold is stable and may not see much movement this week.
Buying momentum picked up after break of key levels yesterday in Copper as worries over supply lingered on disruptions in the mines at Chile and India. Copper (3.2754) has risen towards our expected 3.30 yesterday. 3.30-3.35 could be the near term targets for now.
WTI (64.96) is down from levels above 65 seen yesterday. 66 is an immediate support turned resistance and while the crude price remains below 66, it could attempt lower levels of 63.50-64.00 before attempting to move up again. Brent (75.67) on the other hand is trading slightly up. A rise towards 77 looks likely while above 74.
Gold (1297.15) is stable without any major movement. Trade within 1300-1280 is possible in the coming sessions.
FOREX
Dollar index (93.51) has broken below the 21 days MA near 93.68. It could either rise again from 93.3, or further below, from levels near 92.8. A break below 92.8 will make the Dollar Index bearish in the medium term.
Euro (1.1792): Euro has breached the 21 days MA near 1.175 and has already tested a high of 1.18. A breach of 1.181 could take it higher towards the 8 weeks MA near 1.19. A breach of 1.19, if it happens, should make the Euro bullish in the medium term.
Dollar Yen (109.96) is continuing its rise towards crucial long term resistance on weekly line chart near 111 (which could be tested next week). A test of 111 (max 112) should then produce a dip.
Euro Yen (129.66): As per our expectation yesterday, Euro Yen is testing crucial resistance level (seen on daily, 3 day and weekly candles) near 129.5-130.0. We had mentioned yesterday that it could dip from here; however, with Dollar Yen still bullish towards 111 and Euro showing some possibility of a further rise towards 1.19, Euro Yen could move higher to test 131.0-131.5 (higher resistance on weekly candles). A breach of 131.5 should make it bullish for the medium term.
Pound (1.3427): Pound has moved higher towards resistance on daily candles (near 1.345). It should dip after testing 1.345. However, a breach of that level could take it higher towards 1.355-1.360.
Dollar Rupee (66.92) : May test 66.80 today. Failure to rise above 67.00-10 by Friday can also make the Dollar vulnerable to a further drop towards 66.60-50 next week.
INTEREST RATES
Current US yields: US 10 Year (2.97%), 30 Year (3.12%), 5 Year (2.81%), 2 Year (2.52%)
The US 10 Year yield is seeing a rise from support on short term chart. As markets wait for the CPI data release and the FOMC meet next week, it might not see a test of 3% immediately. As mentioned yesterday, any sign of dovishness from the Fed next week could lead to another dip in US yields and bring into play the following support levels on medium term chart:
2.55% (10 Year), 2.9% (30 Year) and 2.2% (5 Year)
German 10 year yield (0.47%), as per expectation, has risen from support on short term chart and could move higher towards 0.55-0.60 by next week.
