STOCKS
Indices remain broadly bullish although the impact of the US-China trade deal getting done seems to be reducing. All the major indices, Dow, DAX, Nikkei and Shanghai have key supports which can limit the downside and take them higher thereby keeping the broader bullish view intact. Sensex and Nifty can also move higher, but have crucial resistances coming up which will need a close watch.
Dow (28135.38, +3.33, +0.01%) has come-off from 28290 on Friday. We expect it to sustain above 28000 and remain bullish to test 28400 initially and then the crucial resistance level of 28800 eventually. Only a strong fall below 28000 will bring back the chances of seeing 27650 into the picture.
DAX (13282.72, +61.08, +0.46%) spiked to 13423 on early trades on Friday and has come-off sharply from there. It has an immediate support at 13280 and then at 13200. While these supports hold, a rise to 13500 is possible this week.
As expected, Nikkei (24015.18, -7.92, -0.03%) has come-off slightly but is sustaining above 24000. As mentioned on Friday, the broader outlook is bullish to see a test of 24500 and even 24800-25000 in the coming weeks while the Nikkei remains above the 23600-23500 support zone.
Shanghai (2964.05, -3.63, -0.12%) has resistance in the 2970-2980 region. While it holds, an intermediate dip to 2950 and 2930 is possible. However, the broader picture is bullish to see 3000 and 3050 levels again in the coming weeks while Shanghai remains above 2900
Sensex (41009.71, +428, +1.05%) has risen past 40750 decisively. However, crucial resistance is there in the 41200-41300 region which will need a close watch. Inability to breach 41300 can drag the Sensex lower again to 40500-40100.
However, Nifty (12086.70, +114.90, +0.96%) seems to have more room on the upside than the Sensex. Nifty can rise to 12200 and even 12300-12350 and then can reverse lower again.
COMMODITIES
Brent and WTI are having crucial resistances ahead which are likely to hold and drag the prices lower again. Gold continues to oscillate within its sideways range. Silver seems to lack momentum and looks vulnerable to fall in the near-term. Copper has come-off but has crucial support which needs to hold in order to keep the bullish view alive.
Brent (65.01) rose to 65.79 on Friday and has come-off from there. As mentioned earlier, 65-66 is a strong resistance cluster which can cap the upside and drag the Brent lower to 64-63 again in the coming days.
Similarly, WTI (59.82) has come-off from 60.48. It has an important resistance at 61 which can restrict the upside and take it lower again towards 58 in the coming days. Only a strong break above 61 will negate the bearish view, which will then open doors to see 65 on the upside.
Gold (1474) continues to oscillate between 1450 and 1500 and is moving higher within this range now. As mentioned on Friday, we can expect gold to retain this sideways range for some more time but eventually it is likely to break the range below 1450 and fall to 1440 and 1420 going forward.
Silver (16.92) is struggling to breach the psychological level of 17. However, the upside could be capped at 17.25-17.30 even if it manages to rise past 17 decisively. We expect Silver to come down again to 16.50 levels. A break below 16.75 can accelerate the fall.
As expected Copper (2.79) has come-off after testing 2.83 on the upside and can dip to 2.77 in the coming days. 2.77%-2.75% is a very crucial support zone which has to hold in order to keep the bullish view alive. A break below 2.75% will be bearish to see 2.70% and 2.65% on the downside again. As such we will have to watch the price action closely this week.
FOREX
Dollar-Index has recovered but has a key resistance ahead which has to be broken to gain strength. Euro and Dollar-Yen has come-off from near their key resistances and could fall further if they fail to rise past their near-term resistances. Pound declined on profit booking but has strong supports which can keep the broader bullish view intact and take it higher again. Aussie also has a key support and can move higher while it holds. USDCNY has bounced from a key support and can move higher. Dollar-Rupee is holding well above 70.50 and can trade in the range of 70.50-70.90 with a bullish bias.
Though the Dollar Index (97.11) has bounced-back sharply and is trading above 97 again, it has a key resistance at 97.35 which can restrict the upside. While below this resistance we retain our bearish view on the Dollar index to test 96.50 and 96 on the downside.
Euro (1.1130) has failed to breach 1.12 and has come-off sharply. The region between 1.1150-1.1160 can act a good resistance now and can keep the currency bearish to test 1.1080-1.1060 on the downside in the coming days.
The resistance at 110 on the Dollar-Yen (109.38) seems to be holding well for now. It will have to be seen if the pair manages to rise past 109.5 or not. While below 109.50, a fall-back to 109 and 108.75 looks possible now.
EUR-JPY (121.76) Cross has a support at 121.30 which has to hold in order to keep the possibilities alive of testing the 123-124 resistance region in the near term. However a further rise past 124 is unlikely. In case of the Cross declines below 121.30 now itself, it can fall to 120.75 and 120.50.
Pound (1.3380) has strong support in the broad 1.33-1.32 region where it is likely to get fresh buying interest. The broader view remains bullish and we expect the pair to bounce back above 1.34 and rise to 1.37-1.38.
Aussie (0.6880) has good support in the 0.6865-0.6850 region. While this support holds, the bullish outlook to see 0.70 on the upside will remain intact.
The support at 6.95% on the USDCNY (6.9725) is holding well and the pair has bounced again. While this support holds, we can see the pair moving higher again to 7 and 7.02 levels.
Dollar-Rupee (70.8150) is holding well above 70.50 and could trade in the range of 70.50-70.90. However, while above 70.50, the possibilities are high for it to breach 70.90 and rise to 71.25-71.30 in the short-term.
INTEREST RATES
The impact of the US-China trade deal on the bonds seems to be fading out. The US Treasury yields have come-off on Friday and looks vulnerable for a fall in the coming weeks. The German Yields remain bullish and can move higher, but at a slower pace. The 10Yr GoI has tested its crucial resistance zone on Friday. While this resistance holds, the 10Yr GoI can see a dip this week.
The US 2Yr (1.62%), 5Yr (1.67%), 10Yr (1.83%) and 30Yr (2.26%) have come-off well on Friday after having risen sharply on Thursday. The key resistances at 2.35% on the 30Yr and 1.68%-1.70% on the 2Yr seems to have held very well. While below these resistances, we expect the Treasury yields to fall in the coming weeks. The 30Yr can fall to 2.10% and lower on a break below 2.20%. The 10Yr on the other hand can fall to 1.70% on a break below 1.80%.
The German 2Yr (-0.63%) yield continues to trade lower and stable while the 5Yr (-0.54%), 10Yr (-0.29%) and 30Yr (0.22%) have risen further slightly. The broader bullish view remains intact. The 30Yr can rise to 0.40% in the coming weeks while it sustains above 0.20%. Similarly, the 10Yr can move up to -0.20% and -0.10% while it remains above the support level of -0.40%.
The 6.80%-6.85% resistance region on the Indian 10Yr GoI (6.7873%) is holding well. The yield has come-off from the high of 6.8376% on Friday. While below 6.85% we may see the 10Yr GoI coming down to 6.75% and 6.70% in the coming days.
