STOCKS
Equity indices remain mixed. Dow has bounced but will have to rise past an immediate resistance in order to keep it sideways and also to avoid the danger of a sharp fall from here itself. DAX remains weak and can fall further. Shanghai can rise within its sideways range. Nikkei has bounced but has key resistances ahead which will have to be broken to turn the outlook positive. Sensex and Nifty have room to dip in the near-term but the supports are likely to limit the downside and produce a bounce again to keep the broader bullish view intact.
The Dow (26428.32, +114.67, +0.44%) continues to get support at 26000. However, as mentioned on Friday, it will have to be seen if the Dow manages to rise past 26500 which is needed to reduce the danger of falling below 26000 from here itself. A rise above 26500 can keep the Dow in the range of 26000-27000 for some time.
DAX (12313.36, −66.29, -0.54%) has declined further and remains under pressure. As mentioned on Friday, the view has turned bearish and a fall to 12000 and even 11500 is possible now. 12800 will now act as a good support-turned-resistance.
Nikkei (22123.93, +413.93, +1.91%) has risen back above 22000 and will have to be seen if it can sustain higher. While above 22000, a further rise to 22500-22700 is possible in the near-term. However, the bias continues to remain weak and a fall to 21500 or even lower levels can be seen while the index remains below 22700.
Shanghai (3351.92, +41.91, +1.27%) has risen above the intermediate resistance level of 3320 thereby avoiding a dip to 3200-3180 that we had mentioned on Friday. While above 3300, a further rise to 3400-3450 can be seen. The broader range of 3180-3450 remains intact.
Nifty (11073.45, -28.70, -0.26%) has come down further on Friday. Key support is in the 11000-10900 region (revised from 11100-11000 mentioned on Friday) which we expect to hold and produce a bounce. While above the 11000-10900 support, the broader view of seeing a rise to 11400-11600 remains intact.
Sensex (37606.89, −129.18, +0.34%) is trading in the 37700-37600 support zone and the next deeper support is at 37000. As long as the index sustains above 37000, the broader picture is bullish to see 39500-40000 on the upside.
COMMODITIES
Gold and Silver continue to rally while Copper has dipped below 2.90 indicating some more bearishness for the coming sessions. Crude prices have dipped too and while below immediate resistances, we may expect the correction phase to continue for some more time before sharply moving higher.
Brent (43.28) and WTI (39.98) have both dipped both dipped a bit. On the charts, we continue to give importance to immediate resistances near 45.27 and 43.50-44 which if hold could produce a correction in crude prices. Unless an immediate bounce is seen, we may expect the correction to deepen in the next few sessions.
Gold (1990.60) has moved up to test $2000 as expected and is trading at all time high. Unless a corrective fall from here is seen, we may expect the rise to continue for some more time on the upside.
Silver (24.45) has also moved up breaking above $24 and while that holds, we may expect an attempt to re-test 26. Note that 26 is a crucial resistance and could produce rejection taking the price back toward 24-23 levels in the medium term.
Copper (2.8605) fell below 2.90, unable to sustain at higher levels as resistance near 3 seems to be holding well. A fall towards 2.85-2.80 could be on the cards for the near term.
FOREX
Corrective bounce in Dollar Index has given a breather to the otherwise strong currencies. But we would continue to look at near term crucial levels to see if the current correction continues for some more sessions. Euro, EURJPY, Pound and Aussie could see corrective dips for the next 2-3 sessions while Yuan looks strong. Dollar-Yen has rebounded sharply but we would wait to watch price action near 106. Dollar-Rupee has immediate resistance at 74.85/90 which if holds could push it down towards 74.50/25. But we would watch price action at 74.70 to see if it manages to break lower.
Dollar Index (93.47) has bounced from the low of 92.55 and could test 94 on the upside. A break above 94 needs to be seen and sustained to take the index higher towards 95 in the medium term. Else a dip back from 94 can be seen.
Euro (1.1769) has possibly made a near term top at 1.1908 and has fallen sharply from there as the Dollar Index bounced higher. A fall below 1.17, if seen could make it more bearish. Watch price action near 1.17.
EURJPY (124.60) too seems to have made a near term top at 125.21 and a corrective dip towards 123 could be expected in the near term before again bouncing back to higher levels.
Dollar-Yen (105.84) rebounded sharply from an immediate low of 104.18 but needs to see a sustained break above 106 to continue rising towards 108 or higher. Watch price action near 106 just now.
Aussie (0.7135) has dipped from 0.7227 on Friday but does not look very bearish just now and could re-attempt a test of 0.72 while above 0.71. A break below 0.71, if seen could drag it down to 0.70 in the medium term. For now, we would watch price action to see if it rebounds towards 0.72 in the near term.
Pound (1.3081) fell back from 1.3170, instead of testing our expected 1.32. While the immediate high holds, we may expect some corrective phase of 2-3 sessions before attempting to bounce higher.
USDCNY (6.9759) has dipped further breaking below our expected 6.977 on the downside. There is scope for a fall towards 6.95 while below 6.977.
USDINR (74.8150) has closed above 74.80 on almost all sessions last week. Our expectation of a break below 74.70 was just tested but the pair could not sustain below 74.70 and instead moved back to close higher. While above 74.70, view is bullish towards 74.90-75.00. But on the charts, there is room for a fall towards 74.50-74.25 in the near term.
INTEREST RATES
The US Treasury yields continue to trade lower and are heading down to the key supports. It will have to be seen if they manage to bounce from the upcoming supports or not. The German yields remain lower and keep our bearish view intact. The 10Yr GoI is holding above its support as expected and can see a rise in the near-term.
The US 2Yr (0.11%) and 5Yr (0.22%) Treasury yields remain lower while the 10Yr (0.55%) and the 30Yr (1.22%) have inched slightly higher from levels seen in the early Asian trades on Friday. We will have to watch closely the levels of 0.50% on the 10Yr and 1.18% on the 30Yr. While we prefer to see a bounce from these supports, a break below these levels will negate our view and drag the yields further lower to 0.40% (10Yr) and 1.10%-1% (30Yr).
The German 2Yr (-0.73%), 5Yr (-0.72%), 10Yr (-0.53%) and the 30Yr (-0.11) German yields remain lower and stable. The bearish view is intact. We expect the 10Yr to fall to -0.60% and the 30Yr to test -0.20% on the downside.
The 10Yr GoI (5.8385%) continues to hold above the support level of 5.82% in line with our expectation and has bounced on Friday. A test of 5.85% is possible and a break above it will pave way for a further rise to 5.92%-5.95% in the coming days.
