STOCKS
Dow (25583.75, -0.18%) has broken above immediate resistances and is set to rise in the near to medium term but note resistance on the 3-day candles at current levels which could possibly push the index and keep the price low for a few sessions before the index tries to move up higher.
12500-12300 is an important support for Dax (12633.54, -0.12%) that could take it higher towards 12800+ levels in the medium term. A break below 12500 would open up chances of testing 12300 on the downside. This week could see some ranged movement followed by an upmove in the coming week.
Nikkei (22584.18, -0.27%) is stuck just along the weekly trend resistance for almost 4-weeks now without any indication of further directional clarity. While the resistance holds, there could be some scope of coming off to 22000 but while the index finds it difficult to come off just now, there could be worries of a break past 23000 in the medium term. For now we respect the immediate resistance and expect a fall in the near term.
Shanghai (2792.92, +1.78%) has important support on the weekly line charts and while that holds, downside could be limited in the near term. Some sideways consolidation is possible before a sharp upmove begins. Downside could be limited to 2700-2650.
Nifty (11450, +0.53%) is testing important resistance levels on the 3-day candles and weekly charts. While 11500 acts as a decent resistance, a fall from here is possible in the coming sessions towards 11300.
COMMODITIES
Nymex WTI (67.10) has come off as expected, moving below our expected 68 level and if it does not bounce back immediately, the price could continue to move down in the near term. Although the line charts show a break below immediate support levels, we wait for confirmation on the 3-day and weekly candles chart to assure bearishness in crude prices in the coming week.
Brent (72.52) also came off but continues to trade above immediate support near 71-70 levels. It would be crucial to keep a close watch as, a break below current supports, if seen would trigger fresh bearishness for the medium term.
Support on Gold (1222.70, +0.14%) 3-day candle chart at 1210 and support at 1200 on the weekly line charts suggest that the 1210-1200 is an important support in the near term that could possibly hold and push prices back to higher levels. Trade within 1240-1200 is possible in the next 1-2 weeks followed by a bounce back to higher levels.
Silver (15.47) has support at 15 and is likely to hold in the coming sessions leading to a bounce in silver prices to levels near 15.5-16.0 in the medium term.
Copper (2.7685) has scope of trading in the 2.8-2.7 region (daily candles) while support near 2.7 seems to be holding well on the weekly candle charts. But at the same time, near term resistance on the 3-day candles and the longer term line charts show scope of a sharp fall below 2.70 in the near term. We would remain cautious to see if the Copper breaks lower than 2.70 before testing 2.80 on the upside.
FOREX
Euro (1.1614): Euro could climb higher towards 1.165-1.167 over today-tomorrow . There is resistance in the 1.165-1.167 zone (provided by 21 days MA and 13 weeks MA), which could lead to another dip, back towards 1.155 in the next week.
Dollar Index (95.15): Dollar Index could move lower towards 94.8 (21 days MA) over the next 1-2 sessions. If it breaks below 94.8, there is trendline support near 94.5, which should hold for now, leading to a rise back towards 95.5 next week.
Dollar Yen (110.78): Dollar Yen has broken below support near 111 on daily candles. The 21 MA line on 3 day line chart near 110.65 could provide some interim support. While above 110.59 (previous low on 26th July), it could still move back up towards 112. A break below 110.59 could make Dollar Yen bearish towards the 21 weeks MA near 109.49.
Euro Yen (128.66): Euro Yen looks bearish towards support zone of 127.5-127.0 (seen on daily line chart and 3 day candles) and could test it sometime next week. Upside could be capped near 129.5 by the 13 days MA.
Pound (1.2880): As per expectation, Pound moved down to test support near 1.285 (earlier mentioned as 1.288) on daily candles. It could probably see some rise towards 1.30 in the next 2-3 sessions before resuming its downtrend towards lower levels. An immediate break below 1.285 might however negate the above mentioned upward correction to 1.30.
Dollar Rupee (68.625): Dollar Rupee could again rise towards 68.80 from current levels itself, or, after a test of 68.30. Few more sessions in the broad 68.80-68.30 range could be seen.
INTEREST RATES
The US 10 year treasury auctions saw decent demand yesterday – this is one indication that the yield could continue staying below 3%. Moreover trade tensions saw a rise as China announced that it would retaliate with tariffs on $16 bn worth of imports from USA (tariffs on an equal volume of imports from China would be coming into effect in the US from 23rd August). This development could just enhance the ‘risk off’ sentiment amongst investors.
US 10 year yield (2.95%), 30 Year (3.11%), 5 Year (2.83%), 2 Year (2.67%):
The US 10 year yield has been moving in the 2.95%-3.00% zone since July end and the longer it stays here, greater the chances of it coming back below 2.9%. There is crucial support near 2.82-85%, which it was not able to break below in Jun-Jul ’18 and which might again restrict its downmove (if it happens). A rise past 3% on the other hand is less preferred currently.
Repeating yesterday’s comment on Japanese long term yields: Following resistance levels are of crucial importance. A breach above these levels could trigger the US 10 year to breach 3%.
The Japanese 10 year yield (0.12%): resistance @ 0.129% (previous high)
The Japanese 30 year yield (0.85%): resistance @ 0.85% (long term resistance on medium term chart)
