STOCKS
Dow is inching higher and may attempt to breach 28000. It will have to be seen if it can rise past 28300 which is much needed to become bullish to see further rise. DAX has dipped below 12800 as expected and can fall more on a break below the immediate support at 12600. Nikkei has support coming up that can limit the downside and take it higher again. Shanghai looks mixed and can trade sideways. Sensex and Nifty have risen-back on Friday and will have to be seen if they can get a strong follow-through rise today to keep up the bullish momentum.
The Dow (27930.33, +190.60, +0.69%) may attempt to breach 28000 and move up to 28200-28300 this week. 28300 (revised higher from 28200 mentioned last week) will be a crucial resistance which will have to be broken to see a fresh rise to 28500-29000 levels. While below 28300, the Dow can continue to remain in the 27500-28300 (revised higher from 28200) range for some more time.
DAX (12764.80, −65.20, -0.51%) has declined below 12800 as mentioned on Friday. Our preferred rise to 13800 will get delayed now. 12600 will be an intermediate support and a break below it can drag the DAX lower to 12400-12300 in the coming days. While 12600 holds, the chances of seeing a bounce-back above 12800 will remain alive. We will have to wait and watch.
Nikkei (23004.03, +83.73, +0.37%) has been hovering around 23000 over the last few days. We reiterate that while above 22700, the bullish outlook of seeing a rise to 23800-24000 remains intact. Thereafter we expect the index to see a sharp correction. As mentioned on Friday only an immediate break below 22700 can trigger a fall from here itself and will negate/delay the above mentioned bullish view.
Shanghai (3385.50, +4.82, +0.14%) is stuck in between 3350 and 3400 over the last couple of trading days. As mentioned on Friday, it will have to be seen if Shanghai can break above 3400 to revisit 3450 levels. While below 3400, the chances are high to see a break below 3350 and a fall to 3330-3300 in the near-term. 3350-3450 is the narrow range that can be seen now within the broad 3180-3450/70 range.
Nifty (11371.60, +59.40, +0.53%) has bounced-back to test 12400 again on Friday. The bullish bias remains intact to see a rise to 11600 in the near-term with significant support in the 11250-11200 region. A strong break above 12400 can trigger this rise. Inability to breach 11400 immediately can keep the Nifty inside the 11200-11400 range for some more time.
Sensex (38434.72, +214.33, +0.56%) is managing to hold above 38000. The 37700-39000 range remains intact for now. The bias is bullish to see an upside breakout above 39000 and a rise to 39500-40000 in the coming days. Thereafter a corrective fall is possible. Only a fall below 37700 will reduce the chances of seeing 39500-40000 on the upside.
COMMODITIES
Crude prices trade lower and a possible rounding top formation is seen on the charts which if hold could be bearish for the crude prices going forward. Gold and Silver have immediate supports below current levels and a break below the supports are needed to see a sharp fall in the upcoming sessions. While supports hold, we may expect another bounce back to higher levels indicating a possible weakness in the US Dollar again. Copper is stuck between support and resistance levels of 2.90-3.00. A break on either side would decide on further direction from here.
Brent (44.43) and WTI (42.41) have both dipped from levels above 45 seen last week. On the near term charts, resistances are visible near 47.50 and 44 respectively and while the prices trade below these levels, we may expect a dip in the coming sessions.
Gold (1940.70) and Silver (26.53) have dipped and may trade lower if the Dollar Index manages to remain above 93 and eventually attempt to break above 94. Gold has immediate support on the daily candles chart at 1920 which if holds could produce a bounce back towards 1960-1980 on the upside but a decisive break below 1920, would initiate a sharper fall in the near to medium term. Silver on the other hand, has fallen well from resistance near 29-30 and while that hold, Silver could see a dip to 26.0-25.00 in the near term.
Copper (2.9365) has fallen back after testing 3.00 on the upside on Friday. Immediate support is seen at 2.90 which if holds could produce a bounce back towards crucial resistance at 3.00. Continuous attempts to rise above 3, could eventually take the price higher in the medium term. View is bullish while above 2.90.
FOREX
Dollar Index attempts to move up but needs to break above 94 to initiate a correction phase for most currencies. Euro could head towards important near term support while EURJPY looks bullish while above 124. Dollar Yen and Aussie could be ranged just now with some scope of a rise while Pound may head lower. USDCNY has bounced well from 6.90 and could be ranged in the broad 6.90-6.94 region in the near term. USDINR could also fall while below 75.
Dollar Index (93.21) trades above 93 and could be soon headed towards 94 in the near term. It would be important to see whether the index breaks above 94 to head higher or falls back again from there as this would decide further strength in other currencies and precious metals.
Euro (1.1792) is again heading towards support near 1.17 which needs to break in order to trigger a sharper fall in the near term. Failure to break below 1.17 would lead to another bounce towards 1.18-1.19 in the medium term.
EURJPY (124.76) has immediate support at 124 and while that holds, we may expect a bounce towards 126 in the near term. A break below 124 is needed to turn direction to the downside for the near to medium term.
Dollar-Yen (105.79) could trade in the 106.28 to 105.00 region for the next few sessions. A break on either side would be needed to indicate movement after that.
Aussie (0.7166) has scope to rise towards 0.74 in the near term. Immediate support is seen at 0.71 and lower near 0.70.
Pound (1.3087) has not been able to break above 1.3265 and could trade within 1.30-1.33 region for some more time before a break on either side is seen to decide on further direction.
USDCNY (6.9198) can move up to test 6.94 within the channel downtrend before again falling sharply towards 6.90. Watch price action within the mentioned range as both levels are crucial for the near to medium term.
USDINR (74.92) fell from important near term resistance at 75 and while that holds, we may expect a possible dip towards 74.70 again which needs to break for a sustained fall in the longer run. Watch price action near 75 and 74.70 on either side just now.
INTEREST RATES
The US Treasury yields have dipped on Friday and keep our near-term bearish view intact. The Treasury yields have room to fall further in the coming days. The German yields remain lower. The bearish view is intact and the yields can fall further in line with our expectation. The 10Yr GoI has surged breaking above 6.10% contrary to our expectation. A rise past the immediate resistance at 6.15% will pave way for further rise in the coming days.
The US 2Yr (0.14%), 5Yr (0.26%), 10Yr (0.63%) and the 30Yr (1.34%) Treasury yields have dipped on Friday. Our near-term bearish view of seeing a test of 0.60% (10Yr) and 1.35%-1.30% (30Yr) remains intact. A break below 0.60% and 1.30% will see the 10Yr and 30Yr moving further lower to 0.50% and 1.25% respectively. That in turn will delay our preferred rise to 0.80% (10Yr) and 1.50% (30Yr) that we have been mentioning for some time.
The German 2Yr (-0.70%), 5Yr (-0.71%), 10Yr (-0.51%) and the 30Yr (-0.08%) sustain lower and are keeping our bearish view intact. As we had mentioned last week, the 10Yr can fall to -0.55%/-0.60% and the 30Yr can test -0.15%/-0.20% on the downside in the coming days.
Contrary to our expectation to see a reversal from 6.10%, the 10Yr GOI (6.1410%) has surged breaking above 6.10% on Friday. Resistance is at current levels in the 6.14%-6.15% region. While this holds, a pull-back to 6.10% or 6.05% can be seen in the coming days. But a strong break above 6.15% will boost the bullish momentum and will pave way for a further rise to 6.30%-6.35% in the coming weeks.
