STOCKS
Dow has risen past 33100 contrary to our expectation and can see an extended rise to 33450-33500 before the expected reversal happens. DAX has come closer to its crucial resistance level of 15000 from where we expect it to reverse lower. Nikkei and Shanghai can consolidate sideways with a bearish bias. Sensex and Nifty have strong resistances that can cap the upside and keep the bearish bias intact.
Dow (33171.37, +98.49, +0.30%) has risen past 33100. The reversal from 33100 has not happened. So we may now have to allow for an extended rise to 33450-33500. Thereafter a reversal to 32000 can be seen. For now 32000-33500 (revised up from 33100) can be a possible range.
DAX (14817.72, +68.78, +0.47%) has come closer as expected towards the crucial 14900-15000 resistance zone. We expect 15000 to hold and trigger a reversal towards 14400 initially then to 14000-13800 eventually. A strong rise past 15000 will negate the above mentioned view and in turn will pave way for further rise to 15500.
Nikkei (29369.16, −15.36, -0.05%) is managing to hold above 29000. As mentioned on Friday, a sideways consolidation between 28000 and 30500/31000 looks like a possibility for now. A strong break below 28000 is needed to bring the bearishness to see 27000-26000 on the downside.
Shanghai (3445, +9.71, +0.28%) is moving up towards the upper end of the 3330-3470 range. 3470 and 3500 are important resistances that can cap the upside. While below 3500, the bearish view of seeing 3250-3200 will remain intact. A strong rise past 3500 is needed to negate this bearish view.
As expected, Sensex (49008.50, +568.38, +1.17%) and Nifty (14507.30, +182.40, +1.27%) had recovered on Friday and need to see if they can get a strong follow-through rise. However, we still retain our bearish bias. We reiterate that 50000 on Sensex and 14650/14800-14900 on Nifty are important resistances. While below these resistances, the bias is bearish to see 48000-47000 (Sensex) and 14200-14000 (Nifty) on the downside going forward. Also, the downside extending even up to 46000 (Sensex) and 13800 (Nifty) cannot be ruled out.
COMMODITIES
Commodities trade at crucial levels just now that may decide the future course of movement for the next couple of months. Gold need to remain above 1680-1700 to keep the upside chances intact of rising towards 1750-1800 in the medium term but the difficulty in Gold to rise above 1750 raises a doubt of a sharp fall from current levels. Watch price actin near 1700-1680 in the near term. Silver is bearish towards 24 which if breaks could drag price down to 22. Copper may test 3.90/80 on the downside before bouncing back from there in the medium to long term. Crude prices are stable just now but if a break above 66 on Brent and above 63 on WTI is see, it could signal fresh bullishness for the coming weeks. Watch price action near crucial supports and resistances mentioned.
Brent (65.23) and WTI (61.83) may test 66 and 63 in the very near term which could act as decent resistances. Failure to hold below the mentioned resistances could take the prices higher in the medium term else we may expect the 66-62 and 63-57 range to hold for sometime on Brent and WTI respectively.
Gold (1709.70) has declined after trading within the narrow range of 1760-1720 for quite sometime. 1700-1680 would now be crucial supports to watch which if breaks would trigger fresh fall in Gold, negating our medium to long term bullish view. Watch price action near 1700-1680 over the next few sessions.
Silver (24.68) is bearish towards 24 as the price has been falling as expected. Failure to hold above 24 would drag the price down to 22 in the medium to longer term.
Copper (4.0310) is holding above 4 just now but if the price falls in line with a fall in other metals, we may expect a test of 3.90/80 before further a bounce is seen from there.
FOREX
Crucial levels to watch for on most currencies. Very important resistance at 93 on the Dollar Index needs to hold to keep the bearish view intact else we have to allow for a rise to 94.50. Crucial supports near 1.1750-1.1720 on Euro could be broken if Dollar Index breaks above 93. Pound and Aussie can rise in the near term but could turn bearish if most currencies face a decline. Chinese Yuan is weakening sharply and could test 6.58/60 soon. USDJPY is also heading towards crucial resistance near 110.0-110.20 which if breaks could indicate medium to longer term bullishness contrary to our expectation of a fall from current levels. USDINR could also test crucial resistance at 72.80; a break above this could turn bullish for a test of 73.20/30 over the next few sessions. We would wait and watch price actions closely today.
Dollar Index (92.91) has risen and has come close to our mentioned resistance near 93. If the upside momentum remains intact, we might well see a break above 93 and an eventual rise to 94.0-94.50 before the expected dip is seen. Watch price action near crucial levels of 93 today.
Euro (1.1766) has fallen further and has scope for a test of 1.1750-1.1700 on the downside if Dollar Index continues its rise. Bearish sentiment is likely to remain intact while Euro trades below 1.18. A broad range of 1.17-1.18 could be possible for the coming sessions.
EURJPY (129.37) has risen and could re-test 129.85-130 before again falling off from there. View is bearish while below 131.
Dollar-Yen (109.96) is getting close to crucial resistance near 110.00-110.20 which needs to necessarily hold to put an end to the immediate rise and push the exchange rate back towards 109-108 levels. Failure to pause below 110.0-110.20 would keep the strong upside momentum intact and take the pair towards 111-112 eventually. This would be crucial to keep a watch on as a break above 110.20 would indicate that the pair may trade fairly higher for the coming weeks contrary to our expected dip from 110.20.
Aussie (0.7651) has bounced well and while above 0.7558, Aussie could attempt to rise back towards 0.77 or higher in the near term. Any rejection at 0.77 would drag the price down to 0.7550 in the medium term. Watch price action near 0.77.
Pound (1.3771) has resistance near 1.3850 and while that holds, the intrinsic structure in Pound is bearish. Watch for a small rise from current levels while view is bearish while below 1.3850.
USDCNY (6.5714) has been rising quite sharply and a test of 6.58/60 is on the cards for the near term. View is bullish.
USDINR (72.5150) is likely to move up to test crucial levels of 72.80. Whether a break above 72.80 is seen today or not would be the decider for further direction. A close above 72.80, if seen today would trigger a sharp upmove towards 73.20/30 over the coming sessions before any decline sets in. Watch price action near crucial 72.80 today. Weakness in Euro and Chinese Yuan together can be negative for Rupee. Note that the NDF quotes 72.80 just now.
INTEREST RATES
The US Treasury yields have risen back sharply and keep the bullish view intact. We reiterate that the trend is still up and there is room to move up further before a strong reversal is seen. The German yields are holding well above their key supports and are rising back. This keeps our bullish view intact of seeing a further rise. The 10Yr GoI looks vulnerable for a deeper fall. But a sideways consolidation is possible in the near-term before a fresh fall happens.
The US 2Yr (0.14%) remains stable while the 5Yr (0.89%), 10Yr (1.72%) and 30Yr (2.42%) Treasury yields have risen sharply. Our bullish view remains intact. The 10Yr and 30Yr can test 1.80% and 2.5%-2.6% respectively. A break above these levels will pave way for further rise to 2% on the 10Yr and 2.9% on the 30Yr. However, thereafter the yields can reverse lower. 2% on the 10Yr and 2.9%-3% on the 30Yr care likely to be the cap on the upside.
The German 2Yr (-0.72%), 5Yr (-0.66), 10Yr (-0.32%) and the 30Yr (0.24%) have risen back sharply from levels seen last Friday. The support at 0.20% on the 30Yr has held very well. This keeps the bullish view of seeing 0.35% on the upside. A strong break below 0.20% is needed to negate this bullish view. The 10Yr has support at -0.40% while above which the bullish outlook is intact of seeing -0.20%/-0.15% on the upside.
The 10Yr GoI (6.1230%) is managing to hold above 6.10% but seems to lack strength. The broader view is bearish to see a below 6.10% and a fall to 6% and 5.9% over the medium-term. While above 6.10%, a sideways consolidation between 6.10% and 6.20% is possible before the above mentioned fall happens.
