STOCKS
Looking at the daily candles, Dow (24758.12, -1.00%) looks bearish for the coming sessions and is likely to break below 24500. The resistance on the 3-day chart seems to be holding well and the index may come off towards 24000 in the next few sessions.
Dax (12237.74, +0.14%) looks bearish towards 12000 or even lower in the near term. It would be difficult for the index to move up sharply while below 12500
The daily chart shows some scope of re-testing 21000 on the downside for Nikkei (21674.48, -0.47%) but there is support near 21400 on the 3-day chart which if holds, could initiate medium term bullishness for the index. Watch price action near 21400.
Shanghai (3286.22, -0.16%) is gradually coming down from 3350 levels. It could be stuck in the 3350-3200 region in the near term.
Nifty (10410.90, -0.15%) is stuck in the 10500-10100 region since the last couple of weeks. A fall below 10200-10100 would trigger further downside for the index; else if it moves up above 10500-10600 levels, the focus would turn to the upside.
Sensex (33835.74, -0.06%) needs to move above 34000 in order to initiate medium term bullishness. While below 34000, there is scope of re-testing levels near 33500-33000. While below 34000, near to medium term looks bearish.
COMMODITIES
Brent (64.99) and Nymex WTI (61.12) are stable without any major movement just now. The prices are likely to remain stable in the 66-64 and 59.50-60.0 zone respectively.
Gold (1326.60) continues to remain stable and could trade above 1315-1320 levels for the next 1-2 sessions without any major movement.
Copper (3.1570) almost tested 3.20 on the upside before falling off from there. Overall the price is stuck in the broad 3.2250-3.0750 region and is likely to continue so for the coming week too.
FOREX
The Dollar Index (89.665), is sustaining its break of support on daily candles near 89.75 and over the course of the next week, it might move further down towards support near 89.2-89.0 on weekly line chart. As mentioned yesterday as well, this is a crucial support level seen on a trendline coming from Mar’14, a break of which could lead to medium term bearishness.
Euro (1.2378): As predicted yesterday, the Euro seems to have found some resistance near 1.24, provided by earlier support (now resistance) trendline on the daily line chart. However, in case of a breach of the same, the Euro should test resistance near 1.25-1.255 on 3 day and daily candles over the course of the coming week. The EU CPI data release on Friday would be vital – a higher than expected figure would be bullish for Euro.
Dollar-Yen (106.06) is seeing a resumption of the downmove towards crucial support near 105.5-105.0 on the daily candles -a break of the same would confirm medium term bearishness.
The Euro-Yen (131.25) has moved down from yesterday’s levels near 132 as there has been a pause in Euro strength while the Yen has continued to strengthen against the Dollar. It could move further down towards support near 130 on the weekly candles by next week. A testing of 130 however implies 105 on the Dollar Yen (if Euro stays near 1.24) – if this happens, Dollar Yen might drop further, taking Euro Yen below 130-129.
Pound (1.3977) exactly as per expectation, tested resistance near 1.4 on daily candles yesterday and has dipped from there. Immediate support is now seen near 1.39 on 3 day candles.
Dollar Rupee (64.82) may test 64.75 before again trying to move up towards 65. Overall sideways range in 64.75-65.15 expected in this week.
INTEREST RATES
After US inflation data disappointed yesterday, US retail sales fell for the third consecutive month bringing down sentiments around the US economy’s growth. Some impact of both these data releases are being seen with US yields dropping further.
US 10 Year Yield (2.81), US 30 year Yield (3.05), US 5 year yield (2.60), US 2 year yield (2.25) : US yields continue to see a dip as the Fed meeting comes closer. A week of decline prior to the meeting and an eventual rate hike in the meeting might just push yields up immediately after the meeting.
Lets wait and watch how further US data releases- US Housing Starts data (Friday) and US Industrial Prodn data (Friday) impact yields. We should prepare for some volatility in US yields in the week ahead. (Long term resistance levels for the 4 yields have been as follows: 2.85-2.90, 3.20, 2.7 and 2.2 respectively)
