STOCKS
Equities like the Nikkei, Shanghai, DAX looks bullish and can move up in the coming days. But the Dow, Sensex and Nifty, though have room on the upside, are coming closer to their crucial resistances that can cap the upside and trigger a corrective fall. We will have to wait and watch.
Dow (28907.05 +83.28, +0.29%) remains higher but is not finding strong buyers to take it decisively above 29000. As mentioned yesterday, we see strong resistance in the 29000-29050 region which we expect to hold and trigger a corrective fall to 28500 or even lower.
DAX (13451.52, -31.79, -0.24%) has dipped further but has supports at 13450 and 13420 which needs a close watch. While 13420 holds, the chances are still alive of it moving higher to 13600 in the coming days. Only a strong fall below 13420 will negate the above mentioned upmove.
As expected, Nikkei (24023.90, +173.33, +0.73%) has moved up towards 24000. The outlook is bullish. A strong close above 24000 will pave way for a further rise to 25000 in the coming days.
Shanghai (3122.08, +6.51, +0.21%) has risen above 3100 and need to see if it can close above 3125 today. Such a close will be bullish for the Shanghai to target 3300-3400 over the medium-term.
Sensex (41859.69, +259.97, +0.62%) has risen above 41800. It can now test 42000-42200 while it sustains above 41800. Thereafter a corrective fall to 41800 and even 41500 is possible.
Nifty (12329.55. +72.75, +0.59%) on the other hand can target 12350-12380 while it sustains above 12300. We expect the upside to be capped at 12380 for now and the index can reverse lower again towards 12200-12100.
COMMODITIES
Crude trades lower. WTI looks more bearish than Brent but watch support on Brent which if holds, could pull up WTI also in the near term. Gold and Silver could fall slightly from current levels before bouncing back again. Copper is likely to be ranged.
Brent (64.40) is headed towards immediate support near 64. While the support holds, we may see a bounce back towards 65-66 levels. A bounce in Brent prices could pull back WTI higher which looks more likely to fall from current levels.
Nymex WTI (58.23) seems to have broken below immediate support on the daily candles near 58.50. If an immediate bounce from here is not seen and the price breaks below 58, we may have to allow for a possible dip towards 56-55 in the medium term.
Gold (1541) has come off to re-test 1540. Gold may test 1520 on a break below 1540. Although a fall towards 1520-1500 looks possible in the medium term, we cannot rule out a rise to 1580 on a possible bounce from anywhere below current levels.
Silver (17.82) is trading above support and looks bullish for a rise towards 18.50. A break below 17.80 could allow for a test of 17.50 before a bounce is seen.
Copper (2.8595) is likely to trade in the 2.775-2.85 region for the near term. Extension on either side could see a test of 2.90 and 2.75. Overall ranged movement is expected for the rest of the week.
FOREX
Dollar Index (97.38) is stuck near current levels and could remain below 97.70/60 in the near term. Downside is limited to 97.10/24 just now but an eventual break below 97.24/10 is expected in the near term. View is bearish while below 97.70/60.
Euro (1.1137) could trade below 1.1150 in the near term but could eventually rise back towards 1.1180-1.12.
Dollar-Yen (110.09) has finally moved up beyond 109.72 breaking it on the upside after trying to attempt since Nov’19. This is positive for the currency pair and it could test upper resistance near 111 before seeing a corrective dip from there. Interim resistance is seen near 110.5 which could hold for a short period eventually paving way for a rise towards 111.
EURJPY (122.60) has risen, breaking above 122.50 and could attempt a test of 123.10 before coming off from there. Immediate view is bullish towards upper resistance.
Pound (1.299) tested immediate trend support near 1.2961 before bouncing from there. Pound could target 1.32 again in the near term.
Aussie (0.6894) has dipped from 0.69199 but while above 0.6850, view is bullish for the near term.
USDCNY (6.8666) has been falling sharply and could head towards support near 6.85-6.8320 (possible extension below 6.85 is revised slightly lower) in the near term before bouncing back again from there.
Dollar-Rupee (70.8750) closed higher yesterday but we keep open chances of testing 70.60 today before a sharp bounce is seen towards 71.00 or higher. Only a sustained break below 70.60, if seen would be contrary to our bullish view from here and indicate sharper fall in the medium term. That would force us to revise targets to lower levels. For now a bounce from 70.60 is expected.
INTEREST RATES
The US Treasury yields have moved up and keep our near-term bullish view intact. The German yields remain stable at the near-end (2Yr and 5Yr) while those at the far-end (10Yr and 30Yr) have risen sharply and have room to move further higher. The 10Yr GoI needs to breach 6.60% decisively to gain fresh momentum and move further higher.
The US 2Yr (1.59%), 5Yr (1.66%), 10Yr (1.86%) and 30Yr (2.31%) Treasury yields have moved up across tenors. The near-term bullish view remains intact. We expect the 30Yr to test 2.37%-2.40% on the upside. Support for it is at 2.25%. The 10Yr can target 1.90%-1.95% in the coming days.
The German 2Yr (-0.60%) and 5Yr (-0.49%) yields remain stable while the 10Yr (-0.16%) and 30Yr (0.36%) have moved up sharply. . Our bullish view remains intact. We expect the 30Yr can move up to 0.40%-0.45% and the 10Yr to target -0.10% in the coming days.
The 10Yr GoI (6.5968%) broke above 6.60% but failed to sustain higher. It made a high of 6.6256% and has come-off sharply from there. The yield might consolidate between 6.55% and 6.60% for some time. A strong break/close above 6.60% will pave way for a fresh rise to 6.70%-6.75%.
