STOCKS
Dow (25178.61, -0.62%) dipped slightly instead of moving higher to 25500. Trade within 25000-25500 is likely to be seen in the next few sessions.
Dax (12418.39, +0.58%) moved up in line with our expectation but may pause in the 12400-12550 region just now. If no rejection is seen from levels near 12500, the index could indicate medium term bullishness. Watch price action near 12500-12550 levels.
Nikkei (21789.57, -0.16%) is trading along the resistance and while it holds, a rejection towards 21400-21000 is possible in the near term. Only on a break above current levels, we may negate an immediate fall towards 21000 and expect some bullish trades in the near term. Watch price action near current levels.
Shanghai (3323.47, -0.10%) is almost stable with no major movement. While the medium term resistance near 3350 holds, a fall to levels near 3250-3200 looks possible.
Nifty (10421.40, +1.9%) rose above 10400 contrary to our expectation of a rejection from 10380-10400 levels. I f the current rise sustains, the index may move higher towards 10500-10620 in the coming sessions.
Sensex (33917.94, +1.83%) is exactly at the interim resistance level and if it manages to break on the upside, it could test 34500; else a rejection from here could indicate a short corrective fall from here.
COMMODITIES
Brent (64.80) is testing resistance near 66 and while that holds, the price could come off towards 63-62 on the downside. Upside seems limited for the coming sessions.
WTI (61.21) is likely to trade within 59.50-63.00 region in the next few sessions. Near term is likely to remain sideways.
Gold (1323.30) is trading above immediate support level on the daily candles and while above the support near 1310-1315, the price is likely to move up slowly towards 1340/50.
Copper (3.1220) may trade in the 3.1750-3.0750 region for a few sessions before moving higher towards 3.20/25 levels in the medium term.
FOREX
There are some important data releases in the coming week for the US (US CPI, US Retail Sales, US PPI etc) which might have some impact on Dollar Index and the Euro.
The Dollar Index (89.918) after strengthening last week due to the ECB chief’s dovish stance is now dropping, contrary to our expectation. There is immediate support on daily candles near 89.75 which could be tested in the next 1 or 2 sessions before a bounce back to retest levels near 90.25.In the next 1-2 weeks, we could see the Dollar Index test resistance on 3 day candles near 91, before turning bearish in the medium term.
Euro (1.2335) : Against our expectation of a downmove towards support on daily candles near 1.225, the Euro seems to be respecting support on weekly candles near 1.228-1.23 for now. There is some likelihood that the Euro finds some resistance provided by the 21 days moving average on daily line chart and drop towards 1.225 gradually over this week and the coming week.
Dollar-Yen (106.41) as mentioned yesterday, is respecting immediate resistance near 107 on the daily line charts provided by 13 days and 21 days moving average lines. We repeat that Dollar Yen in this week could again move down towards 106.0-105.5 (there is crucial support at 105.5 and a break of the same would lead to medium term bearishness).
The Euro-Yen (131.24) has moved down only slightly and its downmove towards support near 129.75-129.50 on daily and 3 day candles might get extended into next week. If the Dollar Yen and Euro indeed test supports near 105.5 and 1.225, the corresponding rate for Euro Yen would be 129.23, which would be consistent with the predicted downmove towards support on the Euro yen daily chart.
As per expectation, the Pound (1.3902) after testing strong support near 1.38 has moved up towards 1.39 and could shortly test 1.395 (seen as immediate resistance level on daily candles).
Dollar-Rupee (65.04): Dollar Rupee likely to see a dip towards 64.80/75 before again moving up towards 65.20/25 in the coming sessions.
INTEREST RATES
The Japan 10 Yr yield (0.048%) after having bounced from support near 0.038% last week prior to the BOJ meeting in anticipation of some hawkishness by the central bank is now dropping again as we expected. It might move down towards support near 0.04% in the coming weeks.
The German 10 Yr – US 10 Yr has moved slightly up from support near -2.26% on the long term chart and is near -2.24% currently. With German 10 Yr Yield (0.632) seeing a further fall, the possibility of US yields dipping to keep the German-US yield spread above -2.26% seems more likely.
US 10 Year Yield (2.8736), US 30 year Yield (3.133), US 5 year yield (2.6435), US 2 year yield (2.27) : US yields have again dipped as they continue their oscillation in their respective set ranges. Above, we have written about how the US yields might actually follow German yields to keep the spread above support. This goes against our supposition till now, which was as follows:
“A rise in US yields beyond long term resistance levels is imminent in March. However, last week, we also said that there might just be some drop in US yields in this week, after which the week of the US Fed meeting might then see volatility return, taking yields higher in anticipation of a rate hike. (Long term resistance levels for the 4 yields have been as follows: 2.85-2.90, 3.20, 2.7 and 2.2 respectively – a decisive breach of these levels could happen in March 2nd half.)”
We still need to wait and watch on this as a lot could depend on the US data releases this week.
