STOCKS
The Dow could be vulnerable for a corrective fall as the 29000-29050 resistance region is holding well in line with our expectation. DAX has to sustain above 13400 in order to move higher. Similarly, Nikkei has to breach 24000 decisively to gain fresh momentum. Shanghai has come-off from its key resistance and can dip in the near-term. Sensex and Nifty have crucial resistances ahead which will need a close watch.
Dow (28939.67, +32.62, +0.11%) made a high of 29054 and has come-off from there. As we have been mentioning over the last few days, we expect the 29000-29050 resistance region to hold and trigger a corrective fall to 28500 or even lower in the coming days.
DAX (13456.49, +4.97, +0.04%) has bounced from the low of 13362.20 and need to be seen if it can sustain above 13400 or not. While above 13400, the outlook is bullish to see a rise to 13600 in the coming days.
Nikkei (23922.48, -102.69, -0.43%) has failed to sustain the break above 24000 seen yesterday. As mentioned yesterday, a strong close above 24000 is needed to take the index further higher to 25000. While 24000 holds, Nikkei can remain stuck in the broad range of 23000-24000 for some more time.
The resistance at 3125 is holding well on the Shanghai (3085.34, -21.48, -0.69%) and the index has come-off from the high of 3127 yesterday. While below 3100, a dip to 3060-3050 can be seen in the near-term. Shanghai can trade between 3035 and 3125 for some time before it breaks above 3125 eventually.
As expected Nifty (12362.30, +32.75, +0.27%) is heading towards 12380. We expect it to reverse lower from this resistance towards 12200 or even lower (most preferred). But, if the Nifty manages to breach 12380 decisively (less preferred) then we may have to allow for a further rise to 12550 before we see a correction.
Sensex (41952.63, +92.94 +0.22%) on the other hand has resistance at 42200 which can cap the upside of the current move. A corrective fall thereafter can test 41800 or even lower levels. In case if the Sensex manages to breach 42200, a further rise 42400 is possible.
COMMODITIES
Commodities could bounce back from support levels in the near term and attempt to rise in the coming sessions. Crude prices trade above near term support levels. Gold and Silver could dip a bit. Copper looks bullish in the near term.
Brent (64.26) has dipped further and could test support at 64 within this week from where a bounce is expected in the near term taking the price higher towards 65-66 levels.
Nymex WTI (58.01) has also come down and is trading at important levels just now. A break below 58, if seen could open up chances of further bearishness towards 56-55 in the near term. But if 58 holds as immediate support we may expect a bounce back in Brent too in the next few sessions. Preference would be for 58 to hold just now but could eventually pave way for a further decline.
Gold (1550.90) bounced back from 1540 yesterday to close higher but could fall towards 1520 in the near term. A bounce thereafter from 1520 to 1560 could be possible. Overall Gold could spend some time above 1520.
Silver (17.86) could fall towards 17.50 before a bounce is seen. Near term looks bearish.
Copper (2.8525) has moved up breaking above 2.85 and could test 2.90 on the upside which could form a near term resistance pushing price down towards 2.80/75 again. Only a sustained break above 2.90 would make it bullish towards 2.95-3.00 in the near term.
FOREX
Dollar Index (97.38) is stable and while it remains below 97.70/60 there could be chances of a fall towards 97.24/10. View is bearish while below 97.70/60.
Euro (1.1128) has dipped slightly but could test 1.11 on the downside while upside could be capped at 1.12 levels in the near term. A fall in /dollar Index towards 97.10, if seen could take Euro higher towards 1.1175-1.12.
Dollar-Yen (109.88) has come off from 110.21 and the corrective dip could be short lived just now with a possible upmove towards 110.50-111 before seeing a sharp rejection from there.
EURJPY (122.33) has fallen from 122.76 and could come down towards 122 on the downside. Another attempt to test 122.75-123.00 is possible in the near term before facing stronger rejection is seen.
Pound (1.3022) has bounced back from support near 1.2961 and could be bullish towards 1.32 in the near term.
Aussie (0.6896) has dipped a bit but is trading above support near 0.6850. We may expect a fall towards 0.6850 in the next couple of sessions.
USDCNY (6.8951) has bounced back from 6.8658 and could move higher towards 6.90/92 in the near term. Overall fall in USDCNY could remain while below 6.95.
Dollar-Rupee (70.89) is trading above 70.75 but has not shown strength to test 71 so far. While below 71, there could be some consolidation with downside limited to 70.60.
INTEREST RATES
The US Treasury yields have dipped but have key supports that can limit the downside and keep the possibilities alive of moving higher again. The German yields remain stable and higher and keeps the broader bullish view intact. The 10Yr GoI has risen in line with our expectation and is coming closer to its key resistances that can halt the current upmove and trigger a reversal.
The US 2Yr (1.57%), 5Yr (1.62%), 10Yr (1.81%) and 30Yr (2.27%) Treasury yields have declined across tenors. The 30Yr has an important support at 2.25% which needs to hold in order to keep the chances alive of seeing 2.37%-2.40% on the upside. A break below 2.25% can drag it to 2.15% and even lower. The 10Yr has room to test its key supports poised at 1.79% and then at 1.73%. We will have to wait and watch whether these supports are holding or not.
The German 2Yr (-0.60%), 5Yr (-0.49%), 10Yr (-0.17%) and 30Yr (0.34%) yields broadly remain stable. . The bullish outlook remains intact and the yields have room to move higher. The 30Yr can move up to 0.40%-0.45% while the 10Yr can test -0.10% on the upside.
The 10Yr GoI (6.6662%) broke above 6.60% and surged to test 6.70% on the upside yesterday in line with our expectation. Key resistances are poised at 6.70% and then in the 6.73%-6.75% region which can cap the upside and drag the 10Yr GoI lower to 6.60% in the coming days.
