STOCKS
Dow has declined while Dax still has room on the upside to test 16400 before reversing from there. Nikkei is bearish below 29500/750 while Shanghai seems to be stuck in the 3500-3550 region for now. Nifty can see a fall to 17600/400 on a break below the range of 18200-17800. Sensex too looks bearish on a break below 60000. Overall not much strength is visible in global equities just now.
Dow (35931.05, -211.17, -0.58%) has fallen below 36000. The index needs to fall below 35900 to be bearish towards 35750/500 or even lower.
DAX (16251.13, +3.27, +0.02%) has risen slightly today. The index can test 16400 before we see a reversal from there, as 16400 is a strong medium term resistance.
Nikkei (29451.41, -263.92, -0.8%) has broken the support at 29500. A fall towards 28000 can be seen while below 29500/29750. Below 29500, we may delay or negate the upside for now.
Shanghai (3524.91, -12.18, -0.35%) has come down today. The range of 3500-3550 continues. A strong break above 3550 can take the index towards 3600 while a break below 3500 can take it down towards 3400.Watch price action for a break on either side.
Nifty (17898.65, -100.55, -0.56%) tested 18022.65 before coming down to close at 17898.65.The range of 17800-18200 mentioned previously is holding well for now. A break below 17800 can trigger a fall towards 17600/400.
Sensex (60008.33, -314.04, -0.52%) has come down from the high of 60426.61 and closed just above 60000. If the support at 60000 breaks then a fall towards 59500/000 and even 58000 is possible in the coming sessions. It needs to sustain above 60000 to see a rise towards 62000.
COMMODITIES
Brent and WTI have fallen sharply as expected and indicates that a near term top could be in place. Support at 79/78 is seen in Brent and near 75/73 in WTI. Gold can trade within 1850-1880 while silver needs to rise from support at 24.50 to move up. Copper has broken below support at 4.25 and can fall to 4.20/10/05
Brent (79.87) has fallen as expected and could test 79/78 while below resistance at 83/84 holds. A near term top seems to have been made with a possible fall in crude prices going ahead. Any rise from current levels can be limited to 83/84/85 max while there is scope for a fall towards 75 in the longer run on a break below 78/79. Watch price action near 79/78 to see if the price bounces or manages to break on the downside. Refer to our Nov’21 Crude report released yesterday:
(Kshitij Crude Oil Forecast – Kshitij.com)
WTI (76.90) has come down well and could be headed towards 75-73 before pausing there for sometime. View is bearish while below 80.
Gold (1868.20) remains sideways within overall uptrend. It is likely gain against Crude. Trade within 1850-1880 may hold for now.
Silver (25.02) has immediate support at 24.50 which if holds can produce a bounce back to 25.50-26 in the medium term. Failure to hold above 24.50 can take the price down to 24 or lower before a bounce is seen from there. Watch price action at 24.50.
Copper (4.2320) has broken below support at 4.25 and if that holds, we may expect a fall towards 4.20/10/05 eventually before pausing to turn around from there.
FOREX
Currencies see some corrective movements today. Dollar Index has seen a pullback as expected and could fall to 95.48/40 taking Euro higher towards 1.1350/75. Pound has bounced well from channel support and looks strong while Aussie needs to bounce from 0.7250/60 to head higher to 0.73/7350. USDCNY has downward pressure intact which can eventually lead to a fall towards 6.36/35. USDINR has crucial support at 74 which may hold. Although there is scope for a test of 73.80/60, we watch price action near 74 just now.
Dollar Index (95.725) rose to 96.24 yesterday, but has dipped from there in line with our expectation of seeing a pull back. Need to see if there is more profit-taking now that US Yields have dipped a bit. A fall to 95.48-95.40 is possible in the next 1-2 sessions.
Euro (1.1333) has bounced a bit from yesterday’s low of 1.1264. The German-US10Yr yield spread (-1.87%) is at a crucial support which if holds and produces a bounce could take Euro higher from current levels in the near term. Watch the yield spread to see if it bounces or breaks below the current support. On the charts, 1.1250 could be a decent support.
EURJPY (129.20) has broken below immediate support at 129.50 and if the cross sustains below 129.50, it can fall further to test 129 or even lower to 128.35-128.00. But while above 129.00, there is scope for some more bounce towards 130.40/60. A broad range of 129-130.40/60 is possible in the near term.
Aussie (0.7260) has fallen below mentioned support at 0.7280 and is testing 0.7260 mentioned yesterday. If 0.7250/60 support holds, we may expect a bounce back to 0.73-0.7350 soon.
Pound (1.3496) has been rising well as channel support near 1.33 has held well. While the support holds, Pound is bullish for a rally towards 1.3550/3600.
Dollar-Yen (114.07) has dipped from yesterday’s high of 114.97 and failed to break above 115. Note that 115 seems to be forming a crucial resistance and if it holds, we may expect a sharp and sustained decline below 114-113.75, taking the pair down to 113 or lower. We need to see trade above 113.75-114 to keep upside possibilities intact. Watch price action near current levels.
USDCNY (6.3753) has fallen again to 6.3750 and while the downside pressure remains intact, the pair may fall towards 6.36/35 in the medium term. View is bearish while below 6.40.
USDINR (74.27) has come down to almost 74.25 as expected. Now we look for 74.00 while below 74.60/50/30. Can ideally target 73.80-60 as well, but we also note that 74.00 is a strong Support, especially as RBI might not want a month-close below 74.00. Still, overall trend is down.
INTEREST RATES
The US Treasury yields have come-off across tenors. The resistances have held well as expected and the yields are likely to move down within the broad range now. The German yields remain stable below their first level of resistance. It will have to be seen if they reverse lower from here itself or after an extended rise from here. The 10Yr and 5Yr GoI have come-off yesterday and are likely to move down within their current sideways range.
The US 2Yr (0.49%), 5Yr (1.22%), 10Yr (1.58%) and the 30Yr (1.97%) yields have come-off across tenors. The resistance at 1.65% on the 10Yr has held well as expected. Now a dip to 1.5% can be seen. Broadly our view of seeing a range of 1.35%-1.65% remains intact. The 30Yr has dipped below 2% and can dip to 1.9%-1.85% while it remains below 2%. The expected range on the 30Yr will be 1.75%-2.1%/2.2%.
The German 2Yr (-0.74%), 5Yr (-0.57%), 10Yr (-0.25%) and 30Yr (0.08%) yields continue to remain stable. Immediate resistances at -0.2% (10Yr) and 0.1% (30Yr) are likely to hold and trigger a fresh fall to keep the broader downtrend intact. In case if these resistances are broken, an extended rise to -0.1% (10Yr) and 0.2% (30Yr) is possible. Thereafter the expected reversal can happen.
The resistance at 6.38% has held well again yesterday and the Indian 10Yr GoI (6.3612%) has dipped after testing it. While below 6.38%, a fall to 6.3% is possible. A strong break above 6.38% is needed to see 6.4%-6.43% levels. Overall, we retain our view of seeing a broad range of 6.3%-6.45% for now with a bearish bias to see a downside break of this range and a fall to 6.2% eventually.
The 5Yr GoI (5.6778%) failed to sustain above 5.7% and has come down sharply. It can test 5.66% – the lower end of our preferred 5.66%-5.75%.5.78% range. It will have to be seen if the 5Yr breaks below 5.66% and falls to 5.63%-5.62% or continues to retain the range and moves back up again.
