STOCKS
Dow (25462.58, +0.54%) has again moved up to re-test immediate resistance near 25500 and if that holds, Dow could trade sideways below 25500 for sometime or see a short dip. Only on a confirmed break above 25500, we may expect bullishness in Dow in the longer run.
Dax (12615.76, +0.55%) has to move up above 12700 and sustain in order to continue the rise towards 13000 in the medium term. On the weekly, Dax is likely to trade within 12400-13000 in the next 2-3 weeks.
Nikkei (22626.56, +0.45%) has been trading in a very narrow range within 22400-22800, unable to decide which direction to take. Unless the index falls below 22400-22300 levels, there could be chances that the index eventually breaks above the 22800 level in the medium term. Price action near 22800 is crucial to watch.
Shanghai (2736.04, -0.16%) is trading above 2700 just now. While there is some scope of testing lower levels of 2650, the index could rise back towards 2800 in the medium term.
Nifty (11360.80, +1.03%) is headed towards 11400-11500 resistance levels which could push the index back towards 11300. For now Nifty looks bullish for the next 1-2 sessions.
COMMODITIES
Brent (73.55) and Nymex WTI (68.78) are almost stable. WTI is trading in the narrow 69.0-67.5 region and could possible rise above 69 while the medium term support holds. Brent too is likely to move above 74 in the coming sessions.
Gold (1224.20) has come up slightly but has scope of re-testing 1200 in the coming sessions. Also note that there is support on the 3-day candles near 1210; which if holds could keep the price above 1210 this week.
Copper (2.7510) has moved up from 2.7240 seen on Friday. 2.80-2.65 is the region of trade for the week.
FOREX
Euro (1.1561): Having broken below 1.16 last week, a gradual downtrend towards the previous low of 1.1508 in the next 2-3 sessions is on the cards. A break of 1.1508 opens up lower support on 3 day line chart near 1.145.
Dollar Index (95.245): Dollar Index looks bullish towards resistance on 3 day and weekly candles near 95.6-95.8 in this week. A breach of this resistance would open up higher resistance on daily line chart near 96 – which could correspond with Euro testing support near 1.145.
Dollar Yen (111.33): Dollar Yen has immediate support on daily candles near 111 and lower support near 110.5. While above 110.5, it can move up towards resistance near 113 on weekly candles. Currently, the preference is for 113 to be tested.
Euro Yen (128.73): Euro Yen has broken support on 3 day candles and could move down lower towards 128.0-127.5 in this week before testing support near 127 in the next week. Note that 127.0-127.2 is an important long term horizontal support level on weekly line chart, whose break would be very bearish.
Pound (1.2995): Pound broke below horizontal support on weekly candles near 1.3050 last week in spite of the rate hike by the Bank of England. As mentioned on Friday, a downmove towards 1.290-1.288 (support on daily candles) now looks possible in the next 2-3 sessions in this week.
Dollar Rupee (68.61): Dollar Rupee could test support near 68.30-20 early this week, followed by a rise back towards 68.60-80. Another dip from 68.60-80 after that might confirm the beginning of a gradual downtrend in the weeks ahead.
INTEREST RATES
Last week, the US Fed did not hike rates but re-asserted that the US economy is growing strongly – this has made a September rate hike almost certain and a December rate hike highly likely.
We have been writing that the big question that arises now is – will the Fed continue with as many rate hikes in 2019 as well? In the coming weeks, more clarity and certainty on this issue would start emerging, which might thereby be the primary determinant for whether the US 10 year yield breaks above 3.125% in 2018 or not.
US 10 year yield (2.96%), 30 Year (3.09%), 5 Year (2.83%), 2 Year (2.65%):
Last week, the Bank of Japan also maintained status quo in its policy but also indicated that its policy framework will be more flexible in future for the long term yield. This led to the Japanese 10 year yield breaching the crucial 0.11% level for the first time in 2.5 years.
After having tested a high near 0.129%, the Japanese 10 year yield (0.11%) could now move lower towards 0.9% in this week before again rising from there.
The German 10 year bond yield (0.41%) is currently respecting resistance on short term and medium term chart near 0.4% . While below this resistance, it could again move lower towards 0.3% this week.
