STOCKS

Stocks are trading higher with crucial resistances ahead. The Dow looks strong to rise towards 35250 while Dax may face resistance near 15700/800 over the next few sessions. Nikkei and shanghai could also increase towards 30500/700 and 3600/3700 ​​respectively. Nifty and Sensex may see a pause or a corrective decline followed by a resumption of the uptrend.

The Dow (34,869.37, +71.37, + 0.21%) has risen well. A break above 35000-35250, if observed, may eventually take the index towards 35631. Watch for price developments as the Dow Jones is expected to rise further from current levels in the near term.

The DAX (15573.88, +42.13, + 0.27%) has risen and may test resistance near 15700/800 in the short term. Thereafter, a fall from there or a breakout to the upside would indicate a new direction.

Nikkei (30139.65, -100.41, -0.33%) was down from 30171 today. While above 30,000, we don’t cancel a test of 30,500-30,700 until we see a corrective drop from there.

Shanghai (3597.10. +14.27, + 0.40%) is trading higher today and although above important supports near 3550-3575 a rally to 3650-3700 can be expected shortly.

Nifty (17855.10, +1.90, + 0.011%) passed the 17943.50 test and came back down from there. A corrective drop towards 17700-17600 is possible in the next sessions both below 18000.

Sensex (60077.88, +29.41, + 0.049%) managed to hold above 60,000 but we can expect a pause or corrective decline from here to around 59500-58500 before resuming the medium rise term. Watch the price action near current levels.

BASIC PRODUCTS

Crude prices are trading higher and may target 85 (Brent) if it does not drop from current levels. WTI can also drop to 78 if it doesn’t drop from 76/77 itself. Gold and Silver are stuck near levels seen over the past two days and should show more movement to indicate a new direction. Until then, we can expect the precious metals to stay at bay. An expected rise in the Dollar Index (see Forex section below) may cause precious metals to fall in the coming sessions. Copper is bullish towards 4.30 / 40 while it is above 4.00 / 10

Brent (79.98) tested 80.19 and moved away from it a bit. It would be crucial to see if Brent comes out of here or manages to get past 80 and hold higher, as that would be surprising and contrary to expectations. We would wait and watch a few sessions to see how the price moves. Any sustained breakout above 80 would trigger a rise towards 85 in the near term.

WTI (75.99) is also close to the resistance at 76/77 mentioned yesterday and failure to decline from here could potentially take WTI towards 78. But we would wait to see if price drops from there. at current levels.

The gold (1753) is blocked and must break on either side of the 1800-1740 region to give more clarity.

Silver (22.67) is also stuck and may move up to 23-23.50 on the upside. The immediate view is bullish above 22.00-22.50.

Copper (4.2885) was slightly lower but is bullish towards 4.30 / 40 as it is above the crucial support at 4.0.

FOREX

Volatility appears to be picking up on currencies. The Dollar Index could head towards resistance at 94 while the Euro could drop to 1.1625-1.16 on a break below 1.1665. EURJPY and USDJPY rise sharply and could head towards 130.50 and 112 respectively. The Aussie and British Pound could also rise, but may face resistance above current levels. The USDCNY has resistance near 6.47 / 48 so support at 6.44 could be inside these levels. The USDINR may go back to 74.

The Dollar Index (93.46) may move up to crucial resistance at 94 which may be in line with the Euro falling towards 1.1625-1.1600. We can expect a corrective decline from 94 on the Dollar Index.

The euro (1.1689) fell below 1.17 as German election results pave the way for coalition talks and could bring some near-term volatility. Although it is below 1.17, it can test 1.1665 which, if it does not hold, may drag the exchange rate towards 1.1625-1.1600. Look at the price action near 1.1665.

EURJPY (129.85) continues to rise and may move higher towards 130-130.50 in the near term. Another breakout above 130.50 is needed for the cross to turn bullish.

The dollar-yen (111.12) eventually broke above the 109-110.80 range, breaking sharply higher. Above 111 a rise to 112 cannot be reversed. The immediate view is strongly bullish.

The Aussie (0.7283) has an opportunity to climb to resistance near 0.7377 which can be tested and face a decline from there to 0.7250-0.72 on the downside.

The Pound (1.3696) appears to be in a 1.3750-1.36 range and unless a breakout on either side is seen it is difficult to predict further moves from here. We wait for a break on both sides of the beach.

The USDCNY (6.4554) is trading below immediate resistance near 6.47 / 48 but also has support near 6.44 which should keep the pair in a range of 6.47 / 48-6. 44 short term.

USDINR (73.8450) broke through the 73.80 mark at the end of yesterday’s session, as gained in yesterday’s morning edition. The pair is expected to hold above 73.80 and climb to 73.90-74.00 near term.

INTEREST RATE

US Treasury yields have risen further and are at a critical level. There is little room for maneuver on the upside as strong resistance looms. While we expect the resistances to hold and produce a reversal, we also remain cautious for now to see a breakout of these resistances and a new rally from here. German yields remain stable and rising. They have room to rise further from here. The 5-year and 10-year GOIs continue to rise and have the potential to rise further from here before the expected reversal occurs.

The yields on 2-year (0.28%), 5-year (0.98%), 10-year (1.48%) and 30-year (1.99%) US Treasuries rose further and are at critical levels. 1.5% (10 years) and 2% (30 years) are key immediate resistances that we expect to maintain and produce a reversal. In case of a break above these resistances, a prolonged rise to 1.6% (10 years) and 2.1% (30 years) is possible and the expected reversal may occur thereafter. Price action in the coming days will require close monitoring.

German 2-year (-0.70), 5-year (-0.56%), 10-year (-0.22%) and 30-year (0.25%) yields remain higher and stable. Our point of view remains the same. The 30Yr can still rise up to 0.3% -0.35% while it remains above 0.2%. The 10yr has immediate resistance at -0.2% which, if broken, may pave the way for a -0.1% test to the upside. Our previous vision of seeing a reversal is undone for the time being.

The Indian 10-year GoI (6.2087%) and the 5-year GoI (5.6869%) increased further. The 10Yr has tested 6.2% as expected and may climb to 6.25% -6.26% as it holds above 6.2%. On the other hand, 5Yr has immediate resistance at 5.7%. A break above can take the 5 year to 5.76% and above, thus negating our previous view of seeing a reversal to 5.64% and below.


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