STOCKS
Dow (20804.84, +0.69%) is trading higher and has risen from levels below 20600 as mentioned last week. 21000 and higher levels of 21170 are important resistances on the upside. While 21000 holds, we may expect the near term to remain within the narrow 21000-20500 zone. Overall broader range of 21200-20400 remains intact for the long term.
Dax (12638.69, +0.39%) tested 12500 before bouncing back from there. Lower support is visible near 12300. A bounce beyond 12800 is not expected to be seen soon.
Shanghai (3095.44, +0.16) is testing resistance on the daily candles and while the immediate trend resistance holds, the price is directed to lower levels. A sustained break above 3120 is needed to take it towards higher levels of 3150-3170.
Nikkei (19659.15, +0.35%) bounced back from 19450 but does not look very bullish just now. While support near 110 holds on Dollar-Yen, Nikkei could try to move up towards 20010 or at least remain sideways within 20010-19300 region.
Nifty (9427.90, -0.02%) is holding well above immediate support near 9350 and while that holds, trade within the 9550-9350 region is possible for the next couple of sessions. Unless 9350 breaks on the downside, near term looks bullish.
COMMODITIES
Muted price action has been seen in Gold (1251). If 1249 holds on a closing basis then sideways consolidation within 1249-1280 continues though the same is not our proffered view. Thus we need to keep a close watch on the price action in Dollar Index (97.22) which could give some cue on further Gold direction. We will remain bearish while it is trading below 1280 levels and a close below 1249 could open up 1230 levels as well.
Similar kind of trading pattern has been seen in Silver (16.86) also. It is trading below 17 levels, thus a possibility of a sideways movement between 16.50-16.91 levels can’t be ruled out.
We were mentioning for last few weeks that 2.44 levels could be an area of strong support for copper, which might open higher levels for the scrip itself. Today copper (2.57) is trading above its crucial resistance of 2.55 and a close above 2.62 could open up 2.70 levels as well.
Brent (54.09) and WTI (50.80) had moved higher in line with our short term expectation. Brent is trading above its crucial resistance of 53.50, which could be a positive sign for the bulls, but WTI is still below 51.20 levels. If they will manage to hold these levels on a closing basis then we could see 56.20 in Brent and 52.51 in WTI within few trading sessions.Brent has to hold 53 levels throughout this week to sustain the bullish momentum. The only concern is the short term overbought condition and the outcome of this week’s U.S crude oil inventories.
FOREX
Dollar remains weak with more downside left and the majors may rally further .
As expected, Dollar Index (97.17) resumed its downtrend after barely a day of pause and tested 97.00 in the last session. Our targets of 96.50-00 may be achieved this week with the trend firmly down in all timeframes.
Euro (1.1191) has achieved our target of 1.1200 but the rise may not be over and the next target of 1.1300 may be met in the next few sessions.
Dollar Yen (111.47) has been moving sideways in the range of 110-112 just as expected which may continue for another couple of sessions.
Pound (1.3003) has sustained above the support of 1.2870, keeping the trend up and the target of 1.3200 can still be achieved as the currency trades at a 8-month high.
Aussie (0.7443) is stuck in the narrow range of 0.7400-70 after its rejection from our resistance 0.7470 last week. Repeat – only a successful break above 0.7470-0.7500 may negate the possibility of seeing the downside targets of 0.7300-0.7290 and bring bullish options on the table.
While our Dollar Rupee (64.64) target of 65.00 has been met as expected but the closing price of 64.64 keeps the next directional path unresolved. The sharp rejection from 65.00 definitely brings back the possibility of a resumption of the larger timeframe downtrend but on the other hand, the chances of another bounce towards 65.00 can’t be ruled out as long as the support of 64.55-50 holds.
INTEREST RATES
The US 10-5Yr (0.45%) has come off sharply and could be headed towards 0.42% in the near term. Overall trend looks down for the coming sessions.
The US yields have bounce slightly from support levels and could move higher in the near term. The 5Yr (1.80%), 10YR (2.25%) and 30Yr (2.91%) are up by 1-2bps compared to the previous session.
The UK 10YR (1.08%) is trading above support near 1% and while that holds, could try to move up towards 1.15% levels. The 20Yr (1.63%) on the other hand has some room on the downside towards 1.50% which could be tested in the coming sessions before we see a bounce from there.
The Japanese yield differentials are almost headed lower and looks bearish in the near term indicating that the yield curve is flattening.
