STOCKS
Overall the stock indices are stable. While Nikkei looks strongly bullish, Dow and Shanghai could nmove up gradually. Nifty could spend some time ranged before moving up.
Dow (26439.93, +0.21%) bounced back from 26350 and tested 26557 yesterday before coming off to close at lower levels. While support near 26250 holds, fall in the index is likely to be limited. A gradual rise towards 27000 is possible in the coming sessions.
Near term resistance on Dax (12435.59, +0.40%) seems to be holding well just now producing an eventual dip towards 12200. A bounce back is possible next week from 12200 levels to re-test 12500 and higher.
Nikkei (24177.71, +1.60%) has risen sharply breaking the immediate resistance on the daily candles. While the rise above 24200-24250 sustains, the index could rally towards 25000 on the upside in the medium term. A rise in Dollar Yen is also possible while Nikkei looks strongly bullish.
Shanghai (2801.57, +0.35%) is likely to rise towards 2850 in the next 2-3 sessions. Thereafter, if the resistance holds, the index could spend some time in the 2750-2850 region; else a break above 2850 if seen would indicate medium term bullishness for Shanghai.
Nifty (10977.55, -0.69%) seems to be in a sideways mode just now in the 10900-11200 region. Note that 10800-10850 is an important support which may hold in the near term producing a bounce back towards 11200+ eventually.
COMMODITIES
Mild dip in the crude prices seen today. Brent (81.78) and WTI (72.24) are trading slightly lower. While the upside possibilities towards 85 and 74 remains for Brent and WI respectively, there could be some consolidation in the near term in the 83-81 region for Brent and below 72.50 for WTI in the near term.
Gold (1188.50) surprisingly broke below 1190 instead of our expectation to move up. This indicates fresh weakness in the prices and that the bears are still around. While the fall below 1190 sustains, Gold could come off further towards the crucial long term support at 1175-1160. For now we would expect 1160 to hold in the medium term.
Copper (2.79) is likely to test support near 2.75 in the next couple of sessions. While that holds, copper could again see a rise towards 2.85-2.90; else a fall to levels below 2.75 would come into picture.
FOREX
Although Euro and Aussie broke below 1.17 and 0.724, they have crucial supports near 1.164-1.160 and 0.7175-0.708. Dollar Rupee could again test 72.80 in today’s session.
Dollar Index (94.96) broke above resistance near 94.5. It now has resistance near the 34 days MA (95.04) and higher up near 95.5 (as seen on weekly line chart). Only on a breach of 95.5 would we start looking at higher levels.
Euro (1.1647) has broken below support near 1.17 on daily candles. However, on weekly candles, there could still be some support near 1.164. Lower down, support could also be provided by the 13 weeks MA (1.1618). Further down, on 3 day line chart, we see 1.16 as an important support. Hence, only on a break below 1.16 will we start looking at 1.14-1.15 on Euro.
Dollar Yen (113.56) breached its previous high of 113.18 and is now looking bullish towards 115 in the next 1-2 weeks. Note that there could still be some resistance near 113.75 as seen on 3 day candles, which could pause the upmove for a bit.
Euro Yen (132.26) looks like it could dip some more to test support near 131 on daily line chart next week. However, from the weekly line chart, the upward bias towards 134 in the next 1-2 weeks still remains.
Pound (1.3081) is likely to dip more towards support near 1.300-1.295 next week. A break below this support would make it bearish towards lower support near 1.28-1.27 on weekly candles (could be tested in the next 2-3 weeks).
Aussie (0.7214) has broken below support near 0.724 on daily candles and could now again drop towards support near 0.7175 on daily line chart. Note that the 0.7175-0.708 zone is a crucial long term support zone on weekly line chart.
Dollar Rupee (72.595) Another test of 72.80 is possible today. Euro’s break below 1.17 increases possibility of an upward bias in USDINR in today’s session.
INTEREST RATES
On Wednesday, the US Fed raised the federal funds rate by 25 bps to 2.25% as expected. Dropping of the term ‘accomodative’ was regarded as dovish. However, the Fed dot-plot has raised the chances of a December rate hike (it is now favoured by 12 out of 16 Fed members). Moreover, a majority of the members are expecting 3 rate hikes in 2019.
In response to dropping of the term ‘accomodative’, the US 10 Year (3.05%) came off from levels near 3.10% – while it stays below 3.10%, it could dip back below 3% in the near term. The dip might be restricted till support near 2.90%.
The 10 Year German-US spread (-2.52%) is at trendline resistance on medium term chart – it could break above the resistance and target -2.45% in Oct. This would be further supportive of a dip in the US 10 Year yield.
The German 10 year yield (0.53%) is facing trendline resistance near 0.54% on medium term chart.
A rise towards -2.45% on the German-US 10 year spread coupled with the German 10 Year yield staying below 0.54% raises possibility of a dip in the US 10 Year below 3%.
Whether 3.10%-3.125% was the year’s top or not is still slightly uncertain – a break above 3.10% on the US 10 Year opens up an important long term resistance near 3.16%, which could still be tested in 2018.
Keep a watch on resistance near 0.82% for the Japanese 30-10 spread (0.78%) – a break above that could be bullish for yields globally. The Japanese 30 Year yield (0.90%) should stay below 0.93%-0.95%.
Indian 10 year bond yield (8.027%) is close to support near 8%. A break below this support could be bearish. On the upside the important resistance to watch is 8.20%. Watch out for the RBI meet next week
