STOCKS
Although there has been a mild dip in Equities over the last couple of days, it has been shallower than anticipated, but longer term Resistances also hold.
For instance, although the DAX (12234.18, -72.97, -0.59%) did dip below 12200 yesterday to a low of 12141.82, the fall did not sustain. Still, longer term Resistance near 12500 on the Weekly Candles is also likely to hold.
Similarly, the KOSPI (2086) is holding onto a tight uptrend with Support at 2080 on the Daily Candles, but the Resistance at 2120 on the Daily Line is also strong.
In the USA, the Dow (26970.71, +162.94, +0.61%) saw a decent bounce yesterday and might even try to move up towards 27500, but we have to remember that 27500 could be a strong Resistance on the Weekly Candles.
Again, only the Nikkei (22065.29, +45.14, +0.20%) appears to be long-term bullish, with dips to be clearly bought, for a target of 23500 at least.
The Shanghai (2948.18, -7.26, -0.25%) is trading lower, as expected, and may be good to test 2925 (maybe lower), in line with our suggestion yesterday.
India saw a bit of profit-taking/ consolidation yesterday, with the Nifty (11440.20, -148.00, -1.28%) extending its fall during the day towards 11400. A low of 11416.10 was made today. 11403 (21-Week moving average) and 11389 (55-MA on the 3-day chart) are the key supports to watch tomorrow. While these supports hold, a bounce to 11500-11600 is possible again and our view of seeing a sideways consolidation between 11400 and 11700 will remain intact. But if Nifty breaks below 11389, then it will come under more pressure for further fall towards 11300 and 11200 going forward.
COMMODITIES
Strong dollar seems to be weighing on the commodities. Gold and Silver have declined sharply and may dip further test their crucial supports. Copper, though remains stable looks vulnerable for a fall in the coming days. Oil declined on the back of an increase in US Crude inventories by 2.4 million barrels. Market was expecting the inventories to fall by 249,000 barrels. Oil is likely to remain subdued in the coming days.
Contrary to our expectation, Gold (1508) has come-off sharply below 1520 again and has negated the chances of a rise to 1555. Key resistance now will be at 1512 while below which a test of 1495-1490 is possible. 1483 is a crucial trend deciding support to watch in the coming days.
Silver (17.97) has declined below the key support level of 18.25 and can test 17.75 on a break below 17.90. While below 18.25, the possibility of seeing 17.50-17.40 on the downside cannot be ruled out.
Copper (2.61) oscillated around 2.60 and remains mixed in the near term. However, the broader bias is bearish and we expect copper to break 2.59 and fall to 2.53 in the short term.
Brent (62.37) declined further as expected to test 61.30 and has bounced from the low of 61.23. Immediate resistance is at 62.65 and while it holds, a fall to 61.30-61.20 can be seen again. A range bound move between 61.20 and 63.50 is possible. We prefer Brent to break 61.20 and fall to 59.50-59.00 in the coming days.
WTI (56.55) has bounced from the low of 55.48 but looks weak with strong resistance in the 57.50-58.00 region which could cap the upside. A fall to 55.35-55.20 can be seen in the near term.
FOREX
A sharp rise in the Dollar Index has dragged the Euro and Pound lower. The Dollar Index has room to move further higher. Both the Euro and Pound are coming closer to their crucial support which needs to hold to avoid further fall. Dollar-Yen has risen sharply and keeps our broader bullish view intact. Aussie has come-off sharply again in line with our expectation and remains bearish. USDCNY has risen above 7.12 and keeps the bullish view intact to test 71.4 and 7.15 on the upside. The Dollar-Rupee can rise to 71.21-71.24 while it sustains above 70.90
Dollar Index (98.93) has surged breaking above 98.75 and has room to test 99.25-99.30 on the upside if it manages to breach further above 99.05. The level of 98.75 will now serve as a good support for the index.
Euro (1.0957) failed to sustain above 1.10 and has come-off sharply yesterday. It can test its crucial support level of 1.09 which we expect to hold and produce a bounce to 1.1020 again. While 1.09 holds, a range bound move between 1.09 and 1.1020 is possible for some time.
As expected, the support at 107 has held very well and the Dollar-Yen (107.66) has risen sharply. A strong break above 107.83 will see a fresh rise to 108.20 and 108.50 again. The broader picture remains bullish to see 109 on the upside while the pair remains above 107.
The EUR-JPY (118.00) is managing to hold above its support at 117.70 but is not gaining strength. The cross can remain mixed in a narrow range of 117.50-118.50 in the coming sessions.
Aussie (0.6755) has come-off sharply again in line with our expectation. The bearish view is intact to test 0.6735-0.6720 on the downside.
Contrary to our expectation Pound (1.2378) tumbled breaking below the key support levels of 1.24 and 1.2370 yesterday. 1.2345 will be an important level which needs to hold to take the pair higher again towards 1.2430-1.2445. A break below 1.2345 can drag the pair lower to 1.2265 and will prove our bullish view of seeing 1.2550-1.2600 wrong.
As expected, the USDCNY (7.1251) has risen above 7.12 and keeps our bullish view intact to see 7.14-7.15 on the upside.
Dollar-Rupee (71.0350) remained stable in a narrow range above 71 most part of the day yesterday. Significant supports are at 70.99 and 70.90 while above which a rise to 71.21-71.24 looks likely.
INTEREST RATES
The US Treasury yields have bounced across tenors but the upside is likely to capped. The yields are expected to come down again and keep our bearish view intact. The German Yields continue to move down as expected and remains bearish to move further lower. The 10Yr GoI has to sustain above 6.75% to move higher and keep our bullish view intact.
The US 2Yr (1.66%), 5Yr (1.58%), 10Yr (1.70%) and 30Yr (2.15%) have risen across tenors. However, the upside is likely to be limited to 2.0% on the 10Yr and 2.25% on the 30Yr if they manage to sustain higher. The broader view remains bearish for the 10Yr to test 1.57% and the 30Yr to see 2% on the downside.
The German yields 2Yr (-0.75%), 5Yr (-0.76%), 10Yr (-0.58%) and 30Yr (-0.10%) remains lower in line with our expectation. The bearish view remains intact for the 10Yr to see -0.68%. The 30Yr can fall to -0.20%.
The 10Yr GoI (6.7609%) remained stable above 6.75% yesterday. It has to sustain above 6.75% to keep the bullish view intact to break 6.80% and rise to 6.85%. A fall below 6.75% on the other hand can drag it to 6.70% and even lower.
