STOCKS
Dow (24657.80, -0.17%) closed below 24700 yesterday, reducing hopes of a bounce back just now. In case the index fails to rise above 24700 again, the index could turn significantly bearish in the coming sessions with chances of testing 24250-23750 on the downside.
Dax (12695.16, +0.14%) has attempted to move up slightly and if it manages to move above 12700 in the near term, the index could pick up some gains soon back to 13000. On the other hand if we see a fall again to levels below 12600, we would take a fresh look on the downside.
Nikkei (22681.38, +0.56%) has bounced from 22200 as expected and while that holds, the index could move up towards resistance at 22800 again. 22800 is a decent near term resistance and while that holds some range-bound movement within 22800-22200 is possible.
Shanghai (2927.70, +0.41%) seems to be holding above 2850 just now and could test 3000 before seeing another fall from there. Near term rise to 3000 is likely within a longer term bearish view.
Nifty (10772.05, +0.58%) continues to trade in the 10650-10850 region with no directional clarity for the medium term just now. continues to remain stable near 10800. A sharp down move is required to take it lower towards 10600. Sensex (35547.33, +0.74%) is also trading within the narrow 35250-35750 region and could soon come out of the range in the next 4-5 sessions.
COMMODITIES
Brent (74.63) has near term resistance at 76 which looks strong just now and may hold for a few sessions keeping the Brent prices lower. While below 76, Brent could test 73-72 before attempting a bounce back towards 76+ levels.
WTI (65.69) is stable for now and could range in the 64-67 region in the near term. While below 67, the price looks bearish but we do not see a fall below 64 just now. Overall some sideways movement is possible in the next few sessions.
Gold (1269.80) has broken below 1270 and while that sustains, medium term view turns bearish with possibilities of testing 1250-1240 in the coming sessions.
Copper (3.05) has come down sharply in the last 1-week and may bounce back from 3.0. On the other hand if the price fails to remain above 3, it could indicate a test of 2.95-2.90 in the near to medium term.
FOREX
Euro (1.1574): Euro again tested levels near 1.155-1.153 yesterday and has already dipped below crucial support on weekly candles near 1.156. While above 1.153, it might rise to 1.16 again in today’s session. A break below 1.153 could make it bearish towards 1.145 (89 weeks MA).
Dollar Index (95.15): Dollar Index is gradually moving up towards resistance near 95.5-95.6 on the 3 day line chart, which could be tested by next week. A test of 1.145 by the Euro could correspond to a test of 96 by the Dollar Index in the coming 1-2 weeks.
Dollar Yen (110.56): As expected, Dollar Yen is continuing its oscillation between 111.0-109.5 this week. However Yen strength might resurface in the weeks ahead as markets get increasingly risk averse. A break below support on daily candles (near 109.5-110.0) sometime next week, is likely to make it bearish towards 107 in the medium term.
Euro Yen (127.98): Repeating yesterday’s comment: chances of bearishness in both Euro and Dollar Yen imply a possible break of horizontal support on weekly line chart (near 127.0) by Euro Yen in the next week. Dollar Yen @ 108 and Euro @ 1.145 gives a target near 124 (support on weekly candles) for Euro Yen – which could be possibly tested in 2-3 weeks.
Pound (1.3171): Pound is approaching support on 3 day candles near 1.31. There might be some support near 1.315, which is delaying a test of 1.31. However, we expect a downmove to 1.31 to happen by next week and a further dip towards 1.30 after that.
Dollar Rupee (68.075): Support seen at 68.00-67.90. Longer term trend points to rise towards 68.50.
INTEREST RATES
Yesterday, the US Fed Chairman reiterated at a Central Banking Forum in Sintra (Portugal) that a gradual rise in interest rates would continue. This led to a slight pause in the risk averseness which had set in due to the increasing prospects of a US-China trade war.
The US 10 year yield rose from lows near 2.88% towards 2.94%. As we have been saying in the last few briefings, the 10 year yield is close to support on medium term chart near 2.9%. It’s inability to rise decisively above 3% indicates that the risk averse sentiment is strong and a decisive break of the support for a test of levels near 2.6% is a possibility in the weeks ahead.
Current US Yields: US 10 year (2.94%), 30 Year (3.08%), 5 Year (2.82%), 2 Year (2.57%)
Also as mentioned yesterday, US Yield curve inversion fears are gripping the bond markets. The less talked about US 10-7 Year spread is now near 0.031% and could possibly invert ie go negative soon. In the past, it has been a precursor to more important spreads ie (10-5 and 10-2) inverting. The 10-2 Year spread had broken long term support near 0.4% in the last few days and is currently near 0.37%.
German 10 year yield (0.38%) could move lower towards support near 0.3% on the medium term chart in the next 1-2 weeks.
