STOCKS
Most Equity indices might have a bullish potential but need to prove their strength in the near term.Else, Bears could be lurking in the shadows.
The Dow (24834, -179, -0.72%) was unable to sustain above 25000, simply giving back all of Monday’s gain. It has to break above 25100 it it wants to move higher towards 26000. Else, it might dip towards 24500 all over again. Interesting juncture. Need to watch from the sidelines.
The DAX (13170, +0.71%) and Nikkei (22929) look quite similar to each other right now, both being in an uptrend at the moment. However, while the DAX has Support at 13000, the corresponding Support on the Nikkei is being challenged. Both can move up some more towards 13300 and 23300 respectively, but we have to watch whether the Nikkei breaks its Support today.
While the Shanghai (3215) has been rising over the last one month, and can possibly rise some more, we have to be careful to see whether it breaks above Resistance at 3250-75 or not.
Although the Nifty (10536.70, +20.00, +0.19%) saw a small uptick yesterday, it could be vulnerable to a fall towards 10440-400 unless it is able to rise past 10625-75 in the near term.
COMMODITIES
Gold (1292.20) bounced from levels near 1280 in line with our expectation. While the immediate support of 1275/80 holds, the price could move up towards 1310 before again coming off to test 1280 or lower. For now the immediate trend is down.
Silver (16.56) is stuck in a broad sideways range. It has risen slightly from levels near 16.50 and could head towards 17. Overall broad range of 16-17 is likely to remain intact.
Brent (79.16) could come off to test 78 on the downside before again attempting to move up while Nymex WTI (71.94) could test 71.00. Near term dip in the crude prices could be short lived.
Brent-WTI Spread (7.24) looks bearish and could come off a bit towards 6.75-6.50 in the coming sessions. This could indicate a fall in Brent prices in the near term.
Copper (3.1210) has risen as expected and could face some resistance near 3.15 which could push the prices back to levels near 3.0750.
FOREX
Dollar index (93.65), as per our expectation, tested support on daily candles near 93.29 yesterday and now seems to be rising from there back towards 94. A deeper correction towards the 5 week moving average near 93.0-93.5 is still possible, which might happen after a retest of 94. In that case, the upside target near 95 would be tested sometime next week or max in the week after that. We have been saying that the upside is likely to be capped till 95. The 89 weeks MA near 95.65 is a possible extension level which should produce a dip, if tested.
Euro (1.1762), as per our expectation, rose to a high near 1.1830 yesterday, thereby almost testing resistance in the downward channel on daily candles. Corresponding to the Dollar Index, it could first see a downmove towards 1.17 and then, a deeper upward correction towards 1.1775-1.185 could still be on the cards. A test of 95 by Dollar Index could imply Euro testing 1.155. The 89 weeks MA for the Euro which could produce a bounce is near 1.145.
Dollar Yen (110.48): As per expectation, Dollar Yen is testing support on daily candles near 110.5. We expect this support to hold and take Dollar Yen back towards 111 and possibly towards 112 in the next 1-2 weeks. The near term upside target are levels near 112, which corresponds with crucial long term resistance on weekly candles.
Euro Yen (129.97) did attempt to touch levels near 131.5 yesterday (as we had mentioned) by seeing a high of 131.35. However it is now dipping from there as the Dollar Yen and Euro both turned bearish. The next few sessions could see Euro Yen ranged between 130.5-129.5 as the Euro moves towards 1.17 and Dollar Yen moves up towards 111 again.
Pound (1.3421): As we expected yesterday, Pound rose to see a high near 1.35 yesterday and could now move down to test channel support on daily candles near 1.338-1.340 over today/tomorrow.
Dollar Rupee (68.045) : Watch Support at 67.90. Might see a dip to 67.75-60 in case that breaks. Else, a rise past 68.15 can trigger a fresh rise.
INTEREST RATES
The minutes of FOMC’s May meeting is due for release later today. Any hint of hawkishness in the minutes could be a trigger for US yields to rise further towards the following targets:
3.2%-3.3% (10 Year), 3.4%-3.5% (30 Year), 3.15% (5 Year) and 2.56% (2 Year)
US 10 Yr Yield (3.054%), 30 Yr (3.198%), 5 Yr (2.89%), 2 Yr (2.585%):
The 10 year yield is still near support on short term chart and is likely to rise from here beyond 3.10% later this week / early next week. The Fed minutes release could be a further impetus for this rise.
The 5 Year yield has dipped slightly below support near 2.9% on short term chart. However it should rise towards 2.94%-2.95% again in the next couple of sessions.
The 30 year yield also continues to stay near 3.20%. However the rise back towards 3.25% doesn’t seem too far off.
