STOCKS
Dow is on a corrective fall and has room to dip further in the near-term. 33500-33000 is a broad support zone which can be tested before a reversal is seen. DAX sustains above 15600 and keeps alive the chances of the rise to 16000-16100 from here itself. Similarly, Nikkei is also holding above 28500 and can test 29500-30000 from here. Shanghai has to sustain above 3500 in order to avoid a deeper corrective fall. Sensex and Nifty are holding well above their crucial support levels of 52000 and 15600. A strong follow-through rise today will reduce the danger of breaking these supports.
Dow (33823.45, −210.22, -0.62%) has declined below 34000 and can now test 33500-33200. Cluster of supports are seen in the 33500-33000 region which we expect to hold and produce a bounce again. The rise to 36000 that we have been mentioning will get delayed now.
DAX (15727.67, +17.10, +0.11%) remains between 15600 and 15800. A break above 15800 will pave way for the expected rise to 16000-16100. A break below 15600 can drag it to 15400. As mentioned yesterday, while above 15400 the broader trend will remain up to test 16000-16100 on the upside. Only a break below 15400 will bring the index under pressure.
Nikkei (29107.98, +89.65, +0.31%) has risen back above 29000 and is keeping alive the chances of seeing 29500-30000. As mentioned yesterday, 28500 and 28000 are strong support while above which the long-term trend is up to target 32000 and higher levels in the coming months.
Shanghai (3516.19, −9.42, -0.27%) is managing to hold above 3500. It will have to be seen if it can gain momentum and rise to 3550-3560 from here. A break below 3500 will see the corrective fall extending to 3450-3425 before resuming the uptrend.
Sensex (52323.33, −178.65, -0.34%) and Nifty (15691.40, −76.15, -0.48%) fell to test their supports at 52000 and 15600 as expected and are managing to hold above them. The indices have to rise past 52500 and 16800 respectively in order to reduce the danger of seeing a deeper fall breaking below 52000 (Sensex) and 15600 (Nifty). The price action and closing today is very crucial.
COMMODITIES
US Dollar continues to strengthen and keep commodity prices low. Most commodities have fallen sharply and look bearish for the near term before they could test deeper supports and bounce ack. Brent, WTI, Gold , Silver and Copper have supports now near 70, 67/68, 1750, 25 and 4.00 respectively which could be tested in the near term before any bounce is seen in the longer run.
Brent (72.50) and WTI (70.22) have fallen further. Both Brent and WTI are holding below immediate resistance at 5 and 73 respectively and we have to see if this leads to a further fall towards 70 and 68/67 respectively in the near term before again trying to bounce back. Immediate view is bearish while Dollar trades strong.
Gold (1784) has continued to fall sharply and has broken below 1800 overnight as the Dollar continues to strengthen. Weekly candle chart indicated crucial trend support coming at 1750 which need to hold to push the price back to 1800+ in the near to medium term. Watch for a fall to 1750 to see if it manages to bounce from there.
Silver (26.25) has shown weakness finally by breaking below 27. It could now head towards next support near 25 in the near term if the Dollar continues to strengthen and rise further.
Copper (4.2065) has fallen to test the initial level of our mentioned range of 4.20-4.00 and the price could soon fall to test 4.00 before trying to bounce from there. Immediate view is bearish.
FOREX
Dollar Index continues to trade higher and we keep a close watch to see if it manages to rise above 92 or face rejection at 92. Euro trades weak and a fall below 1.19 if seen would open up chances of a fall to 1.18. Aussie and Pound look bearish towards 0.75/74 and 1.38/37 respectively while EURJPY could test 131 which if breaks could drag it lower towards 130. Dollar Yen can test 110.85-111 which is an immediate resistance that can produce a rejection. Failure to fall from 111 could open up chances of a rise to 112. USDCNY and USDINR looks bullish and could rise towards 6.45/46 and 74.20/30 before falling off from there.
Dollar Index (91.84) has continued to rise well breaking above 91.50 and could soon test 92 in the near term which is the next resistance level to keep a watch on for any possible reversal. Failure to fall from 92 could open up chances of 93-94 on the upside.
Euro (1.1918) has fallen well on Dollar strength and could be headed towards deeper support near 1.18 if it does not manage to bounce back from 1.19 itself which is a decent support below current levels. Watch price action near 1.19 over the next few sessions.
EURJPY (131.35) has broken below 132 contrary to our expectation of seeing a sharp bounce from 132. This could delay the bullish view we were looking at and could set a temporary fall towards 130 if it breaks below 131 in early sessions next week.
Dollar-Yen (110.20) dipped sharply from 110.82 yesterday. This is surprising as it has not moved up in line with Dollar Index and shows some divergence just now. Watch price action near immediate resistance zone of 110.85-111 which if holds and produces a sharp rejection could be boosted by a fall in Dollar index from 92. If the Dollar Index manages to rise past 92, it could pull up Dollar Yen too towards 111+ levels.
Aussie (0.7552) can be headed towards 0.75/74 before pausing to take a breather. Immediate view is bearish.
Pound (1.3931) has fallen below support at 1.3950 mentioned yesterday and the exchange could be headed lower towards 1.39. Failure to bounce back from 1.39 would open up chances of further fall towards 1.38/37 in the longer run.
USDCNY (6.4445) has risen well and needs to see s sustained rise above 6.45 to continue moving up further towards 6.46/48 eventually. Watch price action near 6.45.
USDINR (74.0825) closed higher impacted by the movement in other global markets yesterday. While the Dollar trades higher and Euro remains weak, Rupee may see further weakness towards 74.20/30 before falling off from there.
INTEREST RATES
The US Treasury yields have come-off sharply at the far-end. A further dip to test their crucial support is likely. It will have to be seen if they can hold above their support. German yields are likely to move up in the coming days indicating the resumption of their overall uptrend. The 10Yr GoI has declined sharply yesterday and needs to see if it extends the fall below 6.03% today which will then reduce the chances of seeing 6.08%-6.10% on the upside.
The US 2Yr (0.21%), 5Yr (0.89%) Treasury yields remain higher and stable while the 10Yr (1.51%) and 30Yr (2.10%) have declined sharply from levels seen in early Asian session yesterday. While below 2.2%, the 30Yr can test 2% and even 1.9% on the downside. The 10Yr can test its crucial support level of 1.4%-1.35% in the coming days and will have to bounce from there to avoid a deeper fall.
The German 2Yr (-0.68%), 5Yr (-0.60%) and 10Yr (-0.20%) yields have bounced slightly while the 30Yr (0.28%) has dipped 2 bps. The 30Yr has support at 0.25% which we expect to hold and produce a fresh rise to keep the broader uptrend intact. The 10Yr on the other hand can gain momentum on a further rise from here and will keep the view intact of seeing 0% (10Yr) on the upside in the coming weeks.
The 10Yr GoI (6.0362%) has come-off sharply from the high of 6.603% yesterday. It will have to be seen if it can sustain above 6.03% to keep alive the chances of seeing 6.08%-6.10% on the upside. A break below 6.03% can take the yield to 6.01%-6% today.
