STOCKS
Dow has recovered sharply after testing 33500 yesterday. The expected range of 33500-35000 remains intact for now. DAX has declined below 15200 and can test 14800 now. The rise to 15700-15800 that we were expecting is not happening now. Nikkei remains bearish to test 27000-26000 while it trades below 28500. Shanghai has failed to rise past 3525 and has dipped below 3500. A fall to 3450-3400 can be seen again. Nifty is struggling to rise past 15100 decisively and can dip to 14800 in the near-term. Sensex on the other hand can test 49500-49000 while below 50500.
Dow (33896.04, −164.62, -0.48%) though has closed lower, had risen back sharply from the day’s low of 33473.8. The support at 33500 is holding well and can continue to keep the index in the range of 33500-35000. As we have been mentioning over the last few days, 33500 and 33000 are important supports. The view will turn bearish only on a strong break below 33000.
DAX (15113.56, −273.02, -1.77%) has declined below 15200 and can now test 14800 on the downside. The chances of seeing 15700-15800 immediately stands reduced. 14800-15500 looks to be the range now. A strong fall below 14800 is needed to completely negate the chances of seeing 15700-15800 on the upside.
Nikkei (28034.87, −9.58, -0.03%) has been oscillating around 28000 since yesterday. View remains bearish to see a fall to 27000-26000 while below 28500. A strong break above 28500 is needed to negate this fall and turn bullish again.
Shanghai (3497.58, −13.39, -0.38%) has dipped below 3500. A further fall from here will can drag it to 3450-3400 in the coming days. It will also negate the chances of breaking above 3525 that we have been expecting over the last few days.
Nifty (15030.15, −77.95, -0.52%) is struggling to get a strong follow-through rise above 15100. A break below 15000 can drag it to 14800 and even 14600 again. A sustained rise past 15100 is needed to move up towards 15200-15400 again. We will have to wait and watch.
Similarly, Sensex (49902.64, −290.69, -0.58%) has to break above 50500 to rise towards 51500-52000 levels again. While below 50500, the chances of a fall-back to 49500-49000 cannot be ruled out in the near-term.
COMMODITIES
Commodities are mixed today. Gold trades higher while Silver and Copper have fallen sharply breaking below 28 and 4.60. Copper is bearish towards 4.40/30 now while Silver could test 27.50-27.00 before again bouncing back to higher levels. Gold needs to break above 1880 and sustain higher in order to continue the upward rally. Crude prices are expected to remain ranged and re-attempt to rise towards resistance levels.
Brent (66.75) and WTI (63.46) trades lower today also but could re-attempt to rise back towards respective resistances. We keep our expectation of a ranged movement within $65-70 on Brent and $62-67 on WTI intact for some more time. Thereafter, a break on either side would decide on further direction from here. Continuous attempts to re-test resistance levels may eventually pave way for a break on the upside. We need to watch price action closely near $70 and $67 on Brent and WTI.
Gold (1872) has risen slightly but trades below 1880 just now. A break above 1880 will take the price higher towards 1900+ levels indicating bullishness for the medium term. Watch price action near 1880.
Silver (27.70) has fallen well breaking below 28. Now while above 27-27.50, we may expect the upside targets of 29.50-30.00 to remain intact and to be tested in the medium term.
Copper (4.5420) has fallen sharply breaking below immediate support near 4.60. The next support levels to look would be 4.40/30. We may expect a sharper and deeper fall towards 4.40/30 in the near term.
FOREX
Dollar Index has bounced back to 90+ levels dragging down Euro below 1.22. Immediate support at 1.21 may holds and Euro could re-bounce to higher levels above 1.22 over the coming week. EURJPY looks bullish while above 132. Aussie has immediate support which needs to hold to produce a bounce back to 0.78 or higher. Pound looks stable just now. USDCNY has risen well and could rise to 6.45/46 soon. USDINR may head towards 73.25/50.
Dollar Index (90.155) bounced back to 90+ levels again without sustaining below 89.70. It would be important to see if the index maintains below immediate resistance near 90.50 or breaks higher to establish a near term low near 89.68 seen yesterday.
Euro (1.2179) dipped from 1.2245 tested yesterday. While support near 1.21 holds, we may not expect a sharp fall below 1.21 and instead a rise back could be possible in the near to medium term.
EURJPY (132.94) has immediate support near 132.50-132.00 which if holds could keep the rising momentum intact and lead to an eventual rise towards 136 in the near term.
Dollar-Yen (109.15) tested 108.57 yesterday before rising back to 109+ levels as expected. We continue to look for ranged movement within 108.50-110 in the near term.
Aussie (0.7734) has very near term trend support at current levels which if holds can produce a rise towards 0.78 or even higher. Watch price action near current levels. Failure to bounce immediately may take it lower towards 0.76.
Pound (1.4109) has come down and a break below 1.41, if seen could take it lower towards 1.40 in the near term. Immediate view is bearish from current levels.
USDCNY (6.4388) has risen a bit and if it continues to rise higher, we may expect a test of 4.45/46 soon.
USDINR (73.1650) bounced well from 72.92 and did not extend down to 72.80. The bounce has been well in line with our expectation and it may continue to rise towards 73.25/50 in the near term. While above 72.80/90, view is bullish towards 73.50.
INTEREST RATES
The US Treasury yields are moving up within their broad range in line with our expectation. The US Federal Reserve’s minutes of its April meeting released yesterday showed that the central bank could begin discussion on adjusting the pace of asset purchase if the economy continues to show rapid progress. This has pushed the Treasury yields higher yesterday. The German yields remain higher and stable. The view is bullish to see further rise from here. The 10Yr GoI remains above its intermediate support and still keeps alive the chances of seeing a corrective bounce before resuming the overall downtrend.
The US 2Yr (0.16%), 5Yr (0.85%), 10Yr (1.67%) and 30Yr (2.37%) Treasury yields have moved up across tenors. This keeps our bullish view of seeing 1.8% (10Yr) and 2.5% (30Yr) on the upside. As mentioned yesterday, a break above 1.7% (10Yr) and 2.4% (30Yr) can accelerate the upmove. 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) are the broad possible range of trade within which the yields can now move towards the upper end of their range.
The German 2Yr (-0.66%), 5Yr (-0.51), 10Yr (-0.11%) and the 30Yr (0.44%) yields remain higher and stable. The view is bullish while above -0.20% (10Yr) and 0.35% (30Yr). A rise to 0% (10Yr) and 0.55% (30Yr) can be seen in the coming weeks.
The 10Yr GoI (5.9749%) continues to trade stable above 5.95%. The near-term view is mixed. The broader view is bearish to see 5.9% on the downside. But while above 5.95%, a corrective bounce to 6.02%-6.04% cannot be ruled out before the above mentioned fall happens.
