STOCKS
Although the equities look bullish for the next few sessions, there are important resistances visible above current levels which may hold and bring down the prices in the medium term. There could be a rise in the equity indices in the next few sessions followed by a corrective fall.
Dow (25241.94, +0.79%) and Dax (12689.39, +1.12%) both have risen. Dax looks bullish towards resistance near 12900-13000 while Dow is trying to break above the important levels of 25250. Dow could turn bullish on a sustained rise above 25250 while Dax may come off in the longer run after testing 13000 on the upside.
Nikkei (22621.22, +0.49%) has bounced from the immediate trend support on the daily candles and could re-test higher levels of 22800-23000 in the near term.
Shanghai (2898.71, -0.24%) is stable near 2900 and has near term resistance at 2950 which could be tested in the next few sessions before coming off from there.
Nifty (11134.30, +0.45%) rose to levels above 11100 and closed higher yesterday. The index could continue to rise towards near term resistance near 11200 before seeing a short term dip from there.
COMMODITIES
On the weekly and 3-day charts, both Nymex WTI (68.80) and Brent (73.91) have risen from support levels and while the supports hold, the prices could eventually move up in the near to medium term. WTI could head towards 70-71 while Brent may also rise targeting 75-76 in the coming sessions.
Gold (1225.10) is stuck in the 1210-1240 region and while price remains below 1240, there is scope of testing 1200 on the downside. A break above 1240 initially is required for prices to gradually move up towards 1270/80 in the longer run.
Support on the 3-day candles has held well on Copper (2.8115) and while the rise sustains, medium term could see a rise towards 2.90-2.95. While above 2.70, Copper looks bullish in the longer run.
FOREX
Dollar Index (94.62): Dollar Index is respecting support on 3 day candles and could rise towards 95.0-95.5-96.0 in the next 1-2 weeks. A break below 94.1 would be required to negate an immediate rise towards 95-96.
Euro (1.1678): Euro might be trading quietly in anticipation of the ECB meet on Thursday. It could continue ranging over today-tomorrow between resistance near 1.174 and support near 1.165. Thursday could see greater volatility. A breach above 1.175 would open up higher resistance near 1.185 and a break below 1.165 would open up supports near 1.16 and lower down, near 1.145. From the Dollar Index’s forecast, it looks like Euro could weaken below 1.16 in the days ahead.
Dollar Yen (111.30): Dollar Yen continues to trade slightly above support near 111 on daily candles. Currently, we are not preferring this support to break; which implies a rise towards 112.0-112.5 in the next few sessions. On weekly candles there is resistance near 112.5 which might cap the upside. If it breaks, then higher resistance near 114 might be the upside target.
Euro Yen (129.99): As expected, Euro Yen hasn’t seen much movement. On daily candles, it could move lower towards support near 129.6 in the next 2-3 sessions.
Pound (1.3141): As per expectation, Pound has moved up slightly and could move up further towards 1.32 in the next 1-2 sessions. The 89 weeks MA (1.3115) on weekly line chart is a crucial support, whose break would confirm medium term bearishness.
Dollar Rupee (68.97): Dollar Rupee is likely to move up towards 69.30 while above 68.80.
INTEREST RATES
Speculations regarding the Bank of Japan’s policy change have also lifted German yields. German 10 year yield (0.4%) is rising towards resistance near 0.45%-0.50% on short term chart, from where it should dip in the weeks ahead. The ECB meeting tomorrow could also be an important factor for German yields. If the ECB’s policy statement has a dovish tilt, the German 10 year yield might not rise till 0.45% and may instead drop towards 0.3%-0.2% again.
The Japanese 30-5 Year yield spread (0.89%) has broken above resistance on medium term chart and could now find higher resistance near 0.92%-0.93%. Similarly, the Japanese 10-5 yield spread (0.177%) has also shot up from support and could now find resistance near 0.180%-0.185%. This suggests that the upside in longer term Japanese yields is capped near current levels.
The rise in Japanese yields had led to a steep rise in US yields as well – which was based on speculation that some Japanese insurers might have offloaded their holding of US Treasuries in response to the possible policy shift by the BoJ.
US 10 year yield (2.94%), 30 Year (3.06%), 5 Year (2.81%), 2 Year (2.64%):
As mentioned yesterday, the 2.95%-3.00% is a potent resistance zone for the 10 year yield. The longer the 10 year yield stays below this zone, the greater the chances of another correction towards 2.80%-2.75%.
