STOCKS
Dow (24271.41, +0.23%) has risen and while the daily trend support near 24000 holds, the index could move up towards 25000. Near term looks bullish.
Dax (12306, +1.06%) is stable and is stuck in the broad 12400-12100 region just now. Break below 12100 support could take it lower towards weekly support near 11800 as mentioned last week. Watch price action near 12100.
Nikkei (22288.67, -0.071%) is stable while above 22000 and could gradually try to move back towards 22600-22800 levels. Overall broad movement in the 22000-22800 region looks likely in the medium term.
Shanghai (2823.43, -0.84%) bounced back to trade slightly higher. While above 2750, there is chance that the index could trade sideways for sometime within 2750-2850 levels. But a break below 2750 in the medium term could open up further downside of 2700 in the longer run.
Nifty (10714.30, +1.18%) rose back sharply from levels near 10550 and is again set to test resistance near 10850. A break above 10850 would be indicative of bullishness in the longer run, negating a sharp correction from here.
COMMODITIES
3-day resistance on Nymex WTI (73.22) seem to be holding well for now and while that holds, the price could come down further to test 72. Brent (78.19) on the other hand may have some space on the upside towards 82 which may be tested before the price comes down.
Gold (1252.40) is trading slightly higher and has support near 1240. While above 1240, the Gold price could trade sideways in the 1270-1240 region for some time before attempting higher levels in the longer run.
Copper (2.9705) may try to move up as the 2.90-2.95 is a support zone and it would be difficult to break that on the downside. While above the support zone, Copper may try to move up in the near term.
FOREX
Euro (1.1656): A migration deal between EU leaders has strengthened the Euro (against our expectation). It has already tested resistance near 1.169-1.170 on daily candles. While below 1.17, it could again dip back towards 1.155. However a breach above 1.17 could make it bullish towards 1.183-1.185 in the near term.
Dollar Index (94.71): Euro’s bullishness has led to the Dollar Index falling to test support near 94.5 on daily and 3 day candles. 94.2 is also an important support level which could restrict the current downmove for the Dollar Index. A break below 94.2 would be bearish in the near term.
Dollar Yen (111.00): Dollar Yen has broken above crucial resistance level near 110.75 on daily and 3 day candles to test a high near 111. Its previous high (in May) of 111.40 is a crucial level now, whose breach would make Dollar Yen bullish. We have been preferring bearishness in Dollar Yen from here; but we might have to change that view if 111.40 is breached.
Euro Yen (129.40): Euro Yen is testing resistance on daily candles and could move up towards higher resistance near 130 in the next couple of sessions. A breach above 130.30 (21 weeks MA) would be bullish and might just correspond with a breach of 1.17 and 111.40 by Euro and Dollar Yen respectively.
Pound (1.3180): Weakness in the Dollar could be reflected against Pound as well in this week. Pound could move up towards resistance on daily and 3 day candles near 1.33, whose breach would be bullish in the coming weeks. We have been saying that 1.30 is a crucial level for the Pound – if it breaks lower, then medium term could be bearish; if it stays above it, it could breach 1.33 and thereby turn bullish.
Dollar Rupee (68.47): If and while the Support at 68.30 holds, we might see a fresh rise towards 68.70-80 this week.
INTEREST RATES
The risk aversion sentiment in global markets continues to sustain. A continuation of the same could lead to a further fall in bond yields over the coming weeks.
German 10 year bond yield (0.30%) is testing support near 0.3% and could possibly rise back towards 0.5% over the next 1-2 weeks while it stays above 0.3%. However, a break of 0.3% will take it lower to previous lows near 0.18%.
US 10 year (2.86%), 30 Year (2.99%), 5 Year (2.74%), 2 Year (2.53%) : The US 10-2 Year yield spread has dipped even lower to 0.33%. As the spread dips lower, the murmurs of an impending US recession would grow stronger.
The US 10 Year yield’s gradual downtrend could target support near 2.70%-2.65% on medium term chart in the coming weeks.
Similarly, the 30 Year yield also looks like it could move towards 2.90%.
