STOCKS
Dow (24448.69, -0.058%) closed slightly higher after testing low of 24324. The 21-day MA near 24300 could be a decent near term support which could push the index a bit towards 24600-24700 in the next few sessions. Overall there could be some movement within 24700-24300 region for the coming sessions.
Dax (12572.39, +0.25%) has not been able to break above 12650 and while that holds, some sideways trade within 12650-12400 is possible. A break above 12650 would be necessary to take the index higher in the medium term.
22500 is a crucial resistance on Nikkei (22229.68, +0.64%) which could be tested in a few sessions. Thereafter a sharp fall can be expected back towards 22000 or lower.
Shanghai (3124.06, +1.83%) has risen sharply from levels near 3050 instead of breaking lower. If the rise sustains, the index could move higher towards 3150 or higher in the coming sessions.
Nifty (10584.70, +0.20%) was stable yesterday and is likely to spend some time ranged within 10650-10500 region.
COMMODITIES
Brent (74.20) has been trying to move up and could test 76 on the upside. 76 is likely to be a decent top for the medium term and the price could then be pushed off to lower levels of 72-71.
Nymex WTI (68.18) is stable after coming off from just above 69. But there could be some more scope towards 69.50-70.00 in the medium term with some interim corrective dips.
Gold (1325.20) dipped further and while below 1340, it could test 1315 before trying to move up again.
Copper (3.1150) is trading within the clear upward channel and could move up to test 3.1750 on the upside. On the weekly chart, 3.20 is an important resistance.
FOREX
Dollar index (90.907) has seen a high near 91.08, thereby breaching crucial resistances on 3 day candles and daily line chart near 90.50-90.75. We had said yesterday that the 90.5-91.0 zone is a crucial resistance zone, whose breach could imply a bullish Dollar in the medium term. We need to see if this breach sustains in the coming sessions or the Dollar Index stays below 91. As per our Apr ’18 Euro report, we currently prefer Dollar bearishness till May/Jun, after which it could turn bullish. Whether the downmove from 103 since Dec ’16 ends immediately, or later in this quarter, would have to be seen.
Euro (1.2207): Euro has seen a low of 1.2185 and is testing the 21 week moving average on weekly line chart, which could provide some support. As mentioned yesterday, 1.225-1.215 is a crucial support zone for the Euro and a break below 1.215 could prove to be seriously bearish. However, our Apr ’18 Euro report prefers some bullishness for the Euro till May/Jun and bearishness after that. The upmove from 1.045 since Dec ’16 could start seeing a significant correction later this quarter.
Dollar Yen (108.74) : Amongst the 2 possibilities we mentioned yesterday, the first one ie a breach past 107.8 to target 21 week moving average near 108.88 (now, 108.92) has happened. We need to see if the 21 WMA provides resistance or the Dollar Yen rises past it to target 110. Upside could be restricted by 110 in the short term, after which it should turn bearish.
Euro Yen (132.75) has risen slightly from yesterday’s levels near 132.3 due to the Dollar Yen’s bullishness. It could however continue to stay below 133 as the Euro sees a possible dip towards 1.215 and the Dollar Yen stays below 109. A break below support on daily candles (near 132.5) could happen if Euro breaks below 1.215.
Pound (1.3938) after breaking support on daily line chart near 1.408 yesterday has, as per our expectation, dipped further and could test crucial long term support level near 1.385 on weekly line chart in the next 1-2 sessions. If this support also breaks, Pound could turn very bearish in the medium term. However, if it holds, we could see a rally towards long term resistance level of 1.46 in the weeks ahead.
Dollar Rupee (66.48): Overbought at current levels. Possible Resistance at 66.30-50. Might dip to 66.30 or maximum 66.00.
INTEREST RATES
The US 10 Year Yield almost touched the psychologically important 3% level yesterday as US yields continued their rally after the last two weeks’ data releases indicated continued growth in the US economy. In the last 2 weeks the following releases had all come out positive: Industrial Production, Capacity Utilization, US Retail Sales data, unemployment claims data and the Fed minutes. In addition, Crude’s rise towards 74 has increased inflation expectations and is fuelling the rise in US yields. The US treasury is auctioning almost 370 billion dollars worth of notes and short term bonds this week – this could further raise yields in the short term.
US 10 Yr Yield (2.96%), 30 Yr (3.13%), 5 Yr (2.8087%), 2 Yr (2.474%):
The US 2 year yield (2.47%), after having reached its highest levels since 2008 could move towards 2.50% and then see a dip towards 2.40%-2.35% soon.
The 10 Year yield (2.96%), as we predicted yesterday, saw a high near 2.99%, thereby almost touching the 3% mark. However it has come off from those levels and is trading near 2.96% currently. It had breached resistance near 2.92% on medium term chart day before yesterday and if it doesn’t dip back below that resistance, it could breach the 3% level soon.
The 30 yr yield has dipped slightly after seeing a high near 3.17% yesterday. A breach of 3% on the 10 year yield could correspond with a breach of 3.2% by the 30 year yield (seen as horizontal resistance on short term chart).
