STOCKS
Equities can consolidate sideways at higher levels. Dow has risen back above 31000 but needs to breach 31650 in order to move up further and negate the fall to 30000 and lower levels immediately. DAX oscillates in the 13800-14200 range. The bias is bearish to break 13800 and fall to 13600-13200. Nikkei will be bearish to test 27000 as long as it trades below 30000. Shanghai is hovering above its long-term support and can remain sideways between 3400 and 3600 for some time. Sensex and Nifty can also trade in the sideways range of 49000-52000 and 14600-15400 for some time with a bearish bias though to break this range on the downside eventually.
The intermediate support at 30500 has held well and the Dow (31496.30, +572.16, +1.85%) has risen back above 31000 sharply on Friday. 31650 will now be a key level to watch. Inability to breach 31650 can keep the index under pressure to test 30000 in the near-term and 29000-28000 over the medium-term. In case if the Dow breaks above 31650 decisively, a rise to 32000-32200 can be seen first before the corrective fall to 30000 and lower levels happen.
DAX (13920.69, −135.65, -0.97%) continues to oscillate in the 13800-14200 range. We retain our bearish bias of seeing a break below 13800 and a fall to 13600 and 13200 going forward. We reiterate that the upside is likely to be capped at 14500-14600 if DAX breaks above 14200 from here.
Nikkei (28992.37, +128.05, +0.44%) has bounced from Friday’s low of 28308.57 but is likely to remain weak for a fall to 27000. A strong rise past 30000 is necessarily needed to negate the fall to 27000 and turn bullish again.
Shanghai (3495.74, −6.25, -0.18%) is struggling to sustain above 3500 for now. 3450 has been already tested and is holding well as expected. The chances of the downside extending to 3400 cannot be ruled out. As mentioned last week, while above 3400, Shanghai is bullish from a long-term perspective to see 4400 in the coming months. A sideways consolidation between 3400 and 3600 is possible before the rally happens.
Nifty (14938.10, -142.65, -0.95%) %) can oscillate in the broad range of 14600-15400 for some time. While below 15400, the bias is bearish to see a break below 14600 and a fall to 14200-14000 eventually. A strong rise past 15400 is necessarily needed to become bullish again and negate the fall below 14600.
Sensex (50405.32, -440.76, -0.87%) on the other hand can trade in the 49000-52000 range for now. The bias is bearish while below 52000 to break 49000 and fall to 48000-47000 before a fresh rally is seen.
COMMODITIES
Crude prices trade higher breaking above all immediate resistances mentioned last week. But we may expect resistance near 73-75 on Brent and 70 on WTI to hold well. Copper has to remain above 4 to continue moving up while Gold and Silver needs to break above 1720 and 26.20 to re-enter the near term bullish phase.
Brent (71.20) and WTI (67.77) have both risen sharply breaking above immediate resistances mentioned last week near $68-70 and $65-67. On Brent 73-75 is the next resistance zone we would keep an eye on while WTI has scope to rise towards 70 which is a resistance on the monthly charts. A rejection from 70 on WTI may pull down Brent too in the near term.
Gold (1708) has risen well from Friday’s low of 1683. Currently trading above 1700, if the rise sustains, a test of 1720 looks possible. Note that a further break above 1720 would be needed to turn medium term bullish on the metal; else a fall back from 1720 cannot be negated.
Silver (25.67) has bounced well but has to break above 26.20, the earlier support turned resistance to keep the upmove on in the coming sessions. While below 26.20, view is bearish.
Copper (4.0570) has also moved up well rising back above 4. The rise needs to sustain above 4 in order to test 4.30/40 again on the upside; else a fall back towards 3.80 cannot be negated just now. We would wait and watch for a couple of sessions for more clarity.
FOREX
Dollar Strength continues keeping Euro, EURJPY, Aussie , Pound, Yuan and Rupee lower. This is likely to continue today also. We may expect a rise towards 6.55 on USDCNY and towards 73.25 on USDINR. Aussie may hold above 0.76. Euro may test 1.1850 before bouncing back from there. Dollar Index itself could limit its upside to 92.50-93.00 levels before declining from there.
Dollar Index (92.05) has broken above 92 and could well extend its ride to 92.50-93.00 from where a decline is possible. Till then major currencies and EM currencies may trade weak against the Dollar.
Euro (1.1901) continues to fall on Dollar strength and has scope for a test of 1.1850 which if fails to hold would open up chances of a possible fall towards 1.1780-1.17ont he downside in the longer run. For now watch price action near 1.1850.
EURJPY (129.03) may trade within 128.70-130 region for sometime before breaking on either side of the mentioned range.
Dollar-Yen (108.43) keeps rallying and could test 110 on the upside in the near term before facing a sharp rejection from there. Immediate view is bullish.
Aussie (0.7696) is likely to hold above important support at 0.76 and could attempt to test 0.7750-0.78 soon on the upside.
Pound (1.3820) has dipped a bit and could bounce higher from 1.38. Watch for support near 1.38. Failure to hold above 1.38 would trigger fresh fall towards 1.36.
USDCNY (6.5065) has finally moved up after the long sideways narrow trade. Now the pair has to sustain above 6.48/50 to slowly move up towards 6.55/60 in the near term. View is bullish for the near to medium term.
USDINR (73.0150) moved up above 73 on Friday after an initial test of 72.60 last week. We may expect a test of 73.20/25 on the upside for the day while downside could be limited to 72.90/80. Overall broad range of 73.25-72.80 may hold for the day. Note that the NDF quotes 73.19 just now indicating a higher USDINR on the OTC markets today.
INTEREST RATES
The US Treasury yields continue to trade strong. The 10Yr has an immediate resistance but the 30Yr has room to move up still. The price action in the coming days will need a close watch to see if the 10Yr is reversing lower or not. For now the view is still bullish. The German Yields are also bullish and can move up further as long as they trade above their near-term supports. The 10Yr GoI can remain sideways with a bullish bias to rise further before a reversal is seen.
The US 2Yr (0.14%), 5Yr (0.82%), 10Yr (1.59%), 30Yr (2.31%) sustain higher. The 10Yr has a key resistance at 1.60% itself. But the 30Yr has room for further rise to 2.5%. If the 10Yr breaks above 1.60% decisively on the back of the rise in 30Yr, then a test of 2% is possible on the 10Yr in the coming weeks before a reversal happens. On the other hand, if 1.60% holds, the 10Yr can fall back to 1.40%. The price action at 1.60% on the 10Yr will need a close watch.
The German 2Yr (-0.70%), 5Yr (-0.62%), 10Yr (-0.30%) and 30Yr (0.20%) yields are attempting to bounce but seem to lack momentum. However we retain our bullish view of seeing 0.20%/-0.15% (10Yr) and 0.35% (30Yr). A reversal is possible thereafter. The 10Yr and 30Yr will have to fall below -0.40% and 0.10% to negate the above mentioned rise.
The 10Yr GoI (6.2253%) has risen back sharply from the low of 6.1804% on Friday. 6.18%-6.24% looks to be a possible near-term range. The bias is bullish to see a break above 6.24% and a rise to 6.28%-6.30% and then a sharp reversal is possible. In case if the yield falls below 6.18%, it can test 6.14% and 6.10% on the downside. The chances of the rise to 6.30% in that case will get reduced.
