Sat, Oct 23, 2021 @ 11:17 GMT
HomeContributorsTechnical AnalysisMarket Morning Briefing: Aussie Is Stable And Ranged Above 0.7220

Market Morning Briefing: Aussie Is Stable And Ranged Above 0.7220

STOCKS

Dow pauses ahead of the FOMC meeting today while the other indices globally have bounced back well from levels seen over the last 2-sessions. Dax may rise slowly towards 15400 which needs to break on the upside to rise further towards 15600 else we may see rejection from 15400 in the next few sessions. Nikkei, Shanghai, Nifty and Sensex look bullish for the near term.

Dow (33919.84, -50.63, -0.15%) broke below 34000 to close lower. As mentioned yesterday, a fall towards 33500-33250 looks possible before a bounce or reversal is seen.

DAX (15348.53, +216.47, +1.43%) has seen a sharp bounce. Watch if the index holds below the earlier support turned resistance near 15400.

Nikkei (29665.42, -174.29, -0.58%) is stable but could test 29500-29250 or even 29000 on the downside before bouncing back from there. View is likely to be bearish for another couple of sessions.

Shanghai (3595.11, -18.20, -0.50%) has fallen again and can test support at 3570 mentioned earlier. Failure to hold above mentioned support can drag the index down to 3500.

Nifty (17562.00, +165.10, +0.95%) rose well from 17326 and while above 17500 a slow rise back to 17600/800 is possible. Broad range of 17800-17200 may hold for the next 2-weeks.

Sensex (59005.27, +514.34, +0.88%) has scope to test support at 58000 today which is an interim support. A bounce from there is then possible for the medium term.

COMMODITIES

Corrective bounce is seen in most commodity prices. Crude prices have risen well over the last 2-sessions and may rise further to test resistance region before coming off from there. Upside is likely to be limited while above 75 (Brent) and 70 (WTI). Gold and Silver have risen from levels seen yesterday. Gold can test 1780/90 while Silver can rise to 23-23.50. Copper is holding well above support at 4.10 and can rise to 4.30/40 soon.

Brent (74.92) dipped to test 73.26 overnight before bouncing back from there. Currently trading near 75, it may test the resistance zone of 75-77 we have been mentioning in the last few editions. Thereafter, whether the price will fall back sharply or continue to rise will have to be seen.

WTI (71.09) too has been rising from levels near 70 and while the corrective bounce holds, a rise towards 73-74 is expected in the next few sessions.

Gold (1777.40) has risen a bit from 1760 seen yesterday. A rise to 1780-1790 looks possible before again falling back to 1740. Any break below 1740 if seen would be bearish towards 1725-1700.

Silver (22.73) has held above our mentioned support near 22 preventing a further fall towards 21. While above 22, a slow rise to 23-23.50 is possible.

Copper (4.2040) held above 4.10 and bounced well from there. A test of 4.30/40 can be on the cards in the near term. If the current bounce is short lived, we may expect a fall from 4.30 itself.

FOREX

Dollar Index and Euro look stable within a fixed range and need to break on either side to give more directional clarity. EURJPY is trading near crucial support at 128 which if fails to produce a bounce could indicate fresh bearishness towards 127-126. Watch price action near current levels. Aussie and Pound have risen a bit but need to see if it is sign of fresh reversal or a short lived corrective bounce within an overall downtrend. USDINR may hold below strong resistance at 73.80-74.00. Trade within 73.40/60-73.80-74 may hold for now.

Dollar Index (93.229) has immediate resistance near 93.40/45 which if holds can keep the index within 93-93.45 for the next few sessions. Thereafter we need to wait and watch which side the index breaks.

Euro (1.1723) is trading within the 1.17-1.1750 region for the last 3-sessions. We look at 1.1660/65 as important support on the downside (August low) and while that holds the broad range of 1.1660-1.1750 may hold for some more sessions.

EURJPY (128.25) fell below our expected support at 128 to test 127.93 before bouncing back from there. If the cross manages to hold above 128, it can bounce back towards 129.50-130.50 in the medium term else a couple of more attempts to test levels below 128 can eventually drag the cross lower towards 127-126 on the downside. Watch price action near current levels.

Dollar-Yen (109.42) can be ranged within 109-110/110.50 for the neat term but any break below 109, if seen will bring in fresh bearishness in the medium term.

Aussie (0.7246) is stable and ranged above 0.7220. We need to see if it continues to hold above immediate support and rise back or whether the bounce is corrective within an overall downtrend.

Pound (1.3660) looks stable just now and as mentioned yesterday, we would wait to see if it rises towards 1.37-1.3750 or there is some more downside left in the coming sessions.

USDCNY (6.4655) has resistance near 6.47/48 which can hold after the Chinese markets return from its holiday.

USDINR (73.6150) fell yesterday but may attempt to rise back to test resistance zone of 73.80-74.00. While the resistance holds strong, we may expect trade between 73.40/60-73.80/74 in the near to medium term.

INTEREST RATES

The US Treasury yields remain stable ahead of the US Federal Reserve meeting outcome tonight. On the charts, there is room for rise for the yields before reversing lower again. Will the Fed provide the trigger for this rise tonight? We will have to wait and see. The German yields remain lower and are likely to see a fresh fall from here as the resistances have held well in line with our expectation. The 10Yr GoI remains lower while the 5Yr GoI has bounced-back yesterday. The broader view is bearish to see a further fall from here while the yields remain below their near-term resistances.

The US 2Yr (0.22%), 5Yr (0.83%), 10Yr (1.33%) and the 30Yr (1.86%) Treasury yields remain stable. View remains the same. The 10Yr has to sustain above 1.3% to move up to 1.4%-1.45% and then reverse lower. Else a dip to 1.2%-1.18% can be seen from here itself. The 30Yr has to break above 1.9% to see a rise to 2% and higher levels. While below 1.9%, a dip to 1.8% cannot be ruled out. The outcome of the US Federeal Reserve meeting tonight might set the direction for the yields.

The German 2Yr (-0.72), 5Yr (-0.64%), 10Yr (-0.32%) and 30Yr (0.17%) yields remain stable after turning down earlier this week. The corrective rally seems to have ended. While below the resistances at -0.25% (10Yr) and 0.2% (30Yr), the chances of a fresh fall to -0.5% (10Yr) and 0% (30Yr) in the coming weeks cannot be ruled out.

The Indian 10Yr GoI (6.1218%)has dipped further and keeps our view of testing 6.1% on the downside intact. A break below 6.1% can see an extended fall to 6.05%-6% from here itself.

The 5Yr GoI (5.5863%) bounced back yesterday but has resistance at 5.6%. While this resistance holds, a test of 5.55%-5.5% on the downside will remain intact.

 

Kshitij Consultancy Servicehttp://www.kshitij.com
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

Featured Analysis

Learn Forex Trading