STOCKS
Dow (26064.02, +0.055%) has moved up. It is in an upward channel on the daily candles and could test resistance near 26250-26300 in the near term. Only on a break above 26300, we may consider higher levels of 26600. On the longer term charts also, there is resistance above current levels which may hold in the near term.
Dax (12527.42, -0.087%) also has crucial resistance near 12650-12700 region. A break above 12700 could take it higher towards 12900. For now, a dip from 12700 could be expected.
Nikkei (22928.04, +0.50%) saw a dip yesterday instead of moving higher but is currently trading above 22850. While above 22850, there is still some scope of the upmove to continue towards 23200-23400 in the medium term.
Shanghai (2775.63, -0.085%) is almost stable. Unless a clear break above 2800 is seen, there could be some dip from current levels towards 2700. Channel resistance on the daily candles suggests a possible dip from here in the next 1-2 sessions.
Nifty (11738.50, +0.40%) has been moving up as expected. The index could test 11800 or higher in the near term.
COMMODITIES
Crude prices dipped a bit after news of unexpected gains in the US stockpiles was reported (API data). Overall medium term looks bullish while above current support levels.
Brent (75.99) and Nymex WTI (68.58) both look bullish towards 78 and 70-71 levels in the near term while immediate support near current levels hold.
Gold (1209.50) tested an intra-day high near 1220 yesterday but has dipped from there. Trade in the 1230-1200 region could be possible in the near term with some chances f testing 1190 on the downside. Overall medium term looks bullish.
Copper (2.7285) is bullish towards 2.85 while above 2.70. There could be a slight dip before the price rises towards 2.85 in the medium term.
FOREX
Crucial resistances on Euro and on GBPUSD are holding, suggesting that Dollar strength might resurface in the sessions ahead.
Euro (1.1695) As expected, Euro is coming off from resistance provided by previous support trendline on weekly candles near 1.175 (after having seen a high near 1.173 yesterday). While below 1.175, it could dip below 1.165 by end of this week.
Dollar Index (94.72) saw a low near 93.43 yesterday and has again come up from there. As mentioned yesterday, levels near 94.4-94.3 might restrict the downside in the near term. We might see an upmove towards 95 by end of the week.
Dollar Yen (111.29): Dollar Yen has traded quietly in the 111.0-111.5 zone for the last 4 sessions. Moreover, the last 6 weeks has seen movement in the narrow 110-112.2 zone. On a break above 111.5 and then above 112.2, bullishness towards 113-115 in the weeks ahead could get confirmed. Maybe our target of 112 for this week needs to be reduced to 111.5.
Euro Yen (130.17): Given that Euro has already dipped from resistance and could move down to 1.165 and the Dollar Yen could stay close to 111.5, Euro Yen might not breach the 130-131 resistance zone this week.
Pound (1.2858) is continuing to respect resistance provided by the 21 days MA and by the channel trendline on daily line chart near 1.287. If it breaches this resistance decisively, we could see an upmove towards higher resistance near 1.3000-3050 by next week. A dip from here could initiate a fresh bearish move towards 1.27-1.26. Currently, preference is divided equally between both alternatives.
Dollar Rupee (70.1050) : Rupee might still be ranged against US Dollar and might see 69.90 tomorrow. But, it is weakening against other currencies like the Euro and Yuan, which limits its strength against the US Dollar.
INTEREST RATES
Repeating yesterday’s comment: Progress on a trade deal between US-Mexico has led to a rise in US yields. Earlier last week, the US Fed Chairman’s comments in the Jackson Hole Conference led some analysts to interpret that a December rate hike by the US Fed might get delayed to 2019. We need to watch out for whether this belief grows stronger in the markets – if it does, then the May high of 3.125% for the US 10 year yield would be confirmed as the year’s top.
US 10 Year Yield (2.87%) : Although the 10 year yield is rising, we would wait for a breach above 2.9% before we abandon the possibility of a downmove below 2.82% in this move. Current preference remains bearish for the near term. A breach above 2.9% could however lead to another upmove to 3% and then, a dip from there.
Japan 30 year yield (0.85%) has risen to crucial resistance @ 0.85%. If breached, it would be bullish for long term bond yields of Japan, USA and Germany.
German 10 year yield (0.38%): As expected, it is rising towards resistance near 0.4% on medium term chart (current preference is for 0.4% to not be breached – probably a gradual downtrend towards 0.18% could happen).
German-US 10Yr Spread (-2.49%) has crucial resistance level at -2.45%, which if breached, could make the spread bullish in the medium term – current preference is for the resistance to not be breached.
