STOCKS
Global stock indices could see some up move in the coming sessions after trading low and sideways for quite sometime now.
Dow (24408, +1.79%) fell sharply to close almost near the intra-day lows. Sideways consolidation is likely to continue for some more sessions with a possible test of 23500 over today or tomorrow. Near term looks bearish within the 23500-245000 range trade.
Dax (12397.32, +1.11%) tried to move up but remained stable near 12400 levels. As mentioned yeaterday, we need to watch price action near important resistance at 12500. While 12500 holds, Dax is likely to move down in the coming sessions.
Nikkei (21750.43, -0.20%) is stable just below 21800. A sustained break above 21800 is needed to push the index higher in the near term; else a fall from here could again take it lower towards 21500-21400 levels.
Shanghai (3206.64, +0.51%) finally showed some strength to move up contrary to our expectation mentioned yesterday. It has moved above 3200 almost after 9-10 sessions and if the momentum continues, it could move up towards 3250 and higher in the coming sessions. Near term looks bullish while above 3200.
Nifty (10402.25, +0.22%) and Sensex (33880.25, +0.27%) are trading below our mentioned resistance levels near 10500 and 34000 respectively. While these levels hold, the indices could see a short dip before rising again; else a break above 10500 and 34000 respectively could trigger an upmove in the near term.
COMMODITIES
Brent (70.81) has sharply moved up to test immediate resistance near 71 as mentioned yesterday while Nymex WTI (65.38) has some more scope on the upside and looks bullish towards 67 before seeing a short dip. Brent could remain stable while resistance at 71 holds. Note that the WTI has strong 3-day trend support which if holds could eventually take the price higher towards 68 in the longer run as visible on the weekly charts. Brent does not look that strong just now but as both prices move together, WTI may influence a rise in Brent too.
Gold (1340.40) has moved up a bit and could re-test 1350-1360 in the coming sessions. Failure to break below 1320 would indicate some upside momentum to trigger in the medium term eventually helping the price to move towards 1360-1380 levels.
Copper (3.1260) has moved up sharply breaking above the immediate resistance near 3.10. Higher resistance near 3.20 on the 3-day candles is the next target for Copper in the coming sessions. Near to medium term looks bullish while above 3.10.
FOREX
Dollar index (89.6) didn’t get any support from 13 days or 21 days moving averages on the daily line chart and has broken below them. It is now likely to test support on daily candles and weekly line chart near 89.25 by this week’s end / early next week. The US CPI data release (due later today) is unlikely to have any positive effect on Dollar strength (since analysts expect moderation in inflation which should thereby not raise bond yields).
Euro (1.2358) tested support near 1.2225 last week and has been rising from support for the past 2 days, breaching the 21 days moving average line on the daily line chart. It should now target immediate resistance on daily line chart near 1.2425-1.245 by this week’s end / early next week. We have been saying that: A decisive breach above 1.25-1.26 would imply medium term bullishness for the Euro. While it stays below 1.25-1.26, it could continue its ranging between 1.215-1.255 of the past 2 months.
Dollar Yen (107.12) got support from earlier resistance trendline on daily candles near 106.9 yesterday and could now rise towards 107.4 again. If it rises beyond 107.4, it could target 107.9 which is the previous high seen in Feb end. However, we prefer a dip back towards 107 rather than a rise past 107.4 immediately. We have been saying that 107.9-108.0 is a crucial level for the Dollar Yen. A breach of this level could imply medium term bullishness.
Euro Yen (132.39) has moved up further after breaching resistance line in downward channel on 3 day and weekly candles. The 21 week moving average line on the weekly line chart at 133 could provide some resistance to it. Euro @ 1.2425 and Dollar Yen @ 107 gives us 132.95; which is a likely scenario as per our above forecasts.
As per expectation, Pound (1.4178) is trading just below 1.42 (seen as resistance on daily and 3 day candles).If 1.42 is breached, there could be some interim resistance near 1.43 on 3 day line chart. In the medium term, a breach of 1.430-1.435 could imply bullishness 1.46 (seen as resistance on weekly line chart).
Dollar Rupee (64.99) is likely to remain stable in the 64.80-65.00 region today as well. We prefer an eventual break on the downside. Let us see how that goes.
INTEREST RATES
Repeating yesterday’s comment: US long term yields have been moving in a downward channel since the Fed rate hike last month. The US CPI data release is due later today – analysts expect some moderation in monthly gain figures; however the year-on-year gain figures could reflect higher inflation (which could be slightly misleading considering last year’s low figures in March).
High year on year figures could take yields higher temporarily but a moderation in monthly gains could mean that yields will continue moving down through Apr-May.
US 10 Yr Yield (2.7954%), 30 Yr (3.0150%), 5 Yr (2.62%), 2 Yr (2.2988%) :
The 10 Year could test resistance near 2.83%-2.85% on downward channel in short term charts if markets react to a higher year-on-year figure for US CPI; otherwise we expect it to dip back towards 2.75% or lower.
The 30 yr yield as expected has dipped lower after testing channel resistance and could stay near 3% for the coming sessions.
