STOCKS
Dow continues to remain stable between 34000 and 34500 within its broad 33500-35000 range. DAX seems to lack strength to break the 14800-15500 range on the upside. The expected break above 15500 and a rise to 15700-15800 may get delayed. Nikkei is struggling to breach 28500 and looks vulnerable for a fall. Shanghai remains strong and can test 3625-3650 and then see a corrective fall. Sensex and Nifty sustain well above their support and are keeping the bullish view intact to see 51500-52000 and 15400-15450 respectively.
Dow (34323.05, +10.59, +0.03%) remains stable between 34000 and 34500 as expected within the broad 33500-35000 range. We expect the sideways range to remain intact for some more time. The bias is bullish to break 35000 and see a rise to 36000. We reiterate that 33500 and 33000 are crucial supports and only a break below 33000 will turn the outlook bearish.
DAX (15450.72, −14.37, +0.1%) seems to be struggling to get a strong follow-through rise above 15500. A fall below15400 can see a test of 15200-15000 again and will keep the 14800-15500 range intact. However, while above 14800, the broader bias is bullish to see a break above 15500 and a rise to 15700-15800 and even higher in the coming days.
Nikkei (28461.98, −180.21, -0.63%) seems to be struggling to breach 28500 decisively. This keeps our bearish view of seeing a fall to 27000-26000 intact. As we have been mentioning over the last few days, Nikkei has to break 28500 first and then see a subsequent rise past 29500 in order to become bullish.
Shanghai (3605.04, +11.68, +0.33%) sustains higher and keeps intact our view of seeing 3625-3650 on the upside. As mentioned yesterday, a pull-back thereafter to 3550-3500 cannot be ruled out. However, the bigger picture will still remain bullish to test 3800 on the upside over the medium-term.
Nifty (15301.45, +93, 0.61%) and Sensex (51017.52, +379.99, +0.75%) have held well above15200 and 50500 respectively and have risen further yesterday. The bullish outlook is intact to see 15400-15450 (Nifty) and 51500-52000 (Sensex) on the upside in the coming days. A rise past 15450 (Nifty) and 52000 (Sensex) will bring in fresh bullishness to see record highs.
COMMODITIES
Crude prices trade slightly lower today and is holding well below immediate resistances. We would wait to see if it falls lower or attempts to re-test the resistance levels. Gold and Silver trade lower but could be temporary and rise back soon to higher levels. Gold could move up again above 1900 to teat 1920-1950 while Silver has scope for a rise to 29-30 levels. Copper looks bearish just now and could head towards support of 4.40/30 before bouncing back from there. . Copper is down today and may remain within a broad range of 4.70-4.30 for the next 1-2 weeks.
Brent (68.27) and WTI (65.71) has dipped from levels seen yesterday. A test of resistances is yet to be seen in the near term and we may expect $70 and $67 to hold and produce a deeper fall in the coming sessions. Failure to fall from resistances may open up chances of a further upside towards $75-77 on Brent and $70-72 on WTI before a sharp fall takes place. We wait for confirmation to see price action near immediate resistance levels.
Gold (1898.10) has fallen sharply from levels above 1900. Note that immediate resistance on the upside is seen near 1920 while downside could be restricted to 1880/60 which is an interim support region. While above 1880, we keep hope for a steady rise to 1920/1950 soon. Overall trend remains bullish while above 1860/80.
Silver (27.69) has dipped too but while above 27, the upside momentum remains intact and we would look for a n eventual rise to 28-29-30 on the upside in the coming weeks.
Copper (4.5120) continues to fall as expected and could soon be headed to test support near 4.40/30 before a bounce from there is seen. On the upside, resistance zone of 4.60/70 is holding well.
FOREX
Dollar Index has risen slightly pulling down EURJPY, Euro, Aussie and Pound. Euro may test 1.2150-1.21 before bouncing back while Aussie and Pound looks bearish just now. EURJPY could rise back above 133 while above 132. Dollar-Yen has risen above 109 and could be headed towards 110 soon. USDINR can test 72.60/50 while below 72.80. USDCNY has broken below crucial support at 6.40 and could now be bearish towards 6.36. The view on USDCNY is strongly bearish while below 6.40.
Dollar Index (90.057) has risen back above 90 today as support near 89.50/30 is holding well for now. We may see a possible range of 89.50-90.50 for some time before a break on either side is seen in the medium term.
Euro (1.2191) has dipped below 1.22 contrary to our expectation for a rise to 1.23-1.2320 on the upside. Downside could be limited to 1.2150-1.2100 for the near term before a possible rise towards 1.23 is seen in the medium term. Watch price action near 1.2150-1.2100 in the coming sessions.
EURJPY (132.97) has dipped slightly but is likely to rise above 133 soon to head towards 134-135 eventually. View remains bullish for the medium term.
Dollar-Yen (109.09) has risen as expected and while above 109, it can slowly head towards 110 in the near term.
Aussie (0.7738) has fallen sharply from 0.78 and could trade sideways within 0.78-0.77 for the very near term. While Aussie faces difficulty to rise above 0.78 immediately, we may wait to get confirmation to see which way the exchange rate breaks to give more clarity on future direction from here.
Pound (1.4109) has come off sharply facing strong rejection from 1.40. Scope for a rise past 1.42 seems difficult now and we may expect the Pound to fall to 1.40 on a break below 1.41. Else a range of 1.41-1.42 may continue for some more sessions.
USDCNY (6.3905) has broken below 6.40, the crucial long term support. This is a clear indicator of further bearishness in the pair and could drag the pair down to 6.36 soon on the downside. Sustained trade below 6.40 is like a game-changer now and has put out medium to long term bullishness into question. While below 6.40, the further trend has turned bearish and could see a test of lower targets now.
USDINR (72.77/78) closed lower on Tuesday. We may expect a fall to 72.60/50 while below 72.80. From there we may expect a bounce back towards 73 in the medium term.
INTEREST RATES
The US Treasury yields sustain below their intermediate supports and are likely to come down towards the lower end of their broad range. The German yields are coming closer to their support and can resume their uptrend from there. The 10Yr GoI can continue to remain stuck inside their narrow range for some more time within their broader downtrend.
The US 2Yr (0.15%), 5Yr (0.80%), 10Yr (1.58%) and 30Yr (2.26%) Treasury yields remain stable. As mentioned yesterday, while the the 10Yr and 30Yr sustains below 1.6% and 2.3% respectively, the yields can fall to 1.5%-1.45% (10Yr) and 2.2%-2.15% (30Yr) – the lower end of their 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) range. The price action thereafter will need a close watch to see if the yield can bounce-back or not.
The German 2Yr (-0.68%), 5Yr (-0.58%), 10Yr (-0.21%) and the 30Yr (0.34%) yields are coming down towards their supports. -0.25% (10Yr, revised from -0.20%) and 0.30%/0.28% (30Yr, revised from 0.35%) are important supports which are expected to hold. The German yields can resume their overall uptrend from there to target 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.
The 10Yr GoI (5.9725%) is mixed and is stuck in a narrow range of 5.95%-5.99% over the last few days. The near-term outlook is unclear whether the yield will resume its downtrend from here itself and target 5.9% on the downside or will see a corrective bounce to 6.02%-6.04% and then fall-back.
