Dow and DAX are getting closer to their crucial distance resistance and need a close eye in the coming days. However, Nikkei is currently trading stable and looks bullish to move even higher in the short term. Shanghai can consolidate before resuming the trend. Sensex and Nifty have jumped and need to see if they can sustain higher. Both Sensex and Nifty will also have to break their decisive resistance rather than become bullish and completely ignore the chances of seeing a further decline.
The Dow (24575.90, +369.04, + 1.52%) has rebounded and recovered the loss made on Tuesday. It will have to see if it manages to maintain the rejection. The 24700-25000 will be a crucial resistance zone and a strong rise past 25000 is needed to become bullish for a further rise to 26000. While the 24700-25000 resistance holds, the Dow can turn lower and will continue to trade in the 22500-25000 range.
DAX (11223.71, +148.42, + 1.34%) is back again and is now ready in the 11200-11350 resistance range. An increase to test 11350 is possible in the short term. We will have to wait and see if it can surpass 11350 in the coming days. Such a break above 11350 may take the DAX higher to 11500 initially. A further break above 11500 then confirms the habilitation.
Nikkei (20583.95, −11.20, 0.054%) maintains over 20500 but appears to lack strength to move further higher. The 20800 is the immediate resistance that can be tested while the index remains above 20500. The broader outlook continues to be bullish to see further rise towards 21000-21500 over the coming days as long as Nikkei trades above 20000.
As expected, Shanghai (2887.31, +3.57, + 0.12%) remains stuck between 2875 and 2900. This tight sideways consolidation can continue for a few more days. As mentioned yesterday, an outbreak on either side of 2875-2900 will then determine whether Shanghai will go up to 2925-2950 from here itself or will see another leg of corrective decline to 2850-2825 only before resuming it total increase.
The Nifty (9066.55, +187.45, + 2.11%) has risen and closed over 9000 yesterday, reducing the danger of seeing a break below 8800, as we had mentioned yesterday. While Nifty holds over 9000, a 9200-9250 test is possible in the short term. However, a strong rise past 9250 will be needed to speed up and also to wipe out the danger of seeing a fall below 8800. So the price negotiation around 9200-9250 needs a close eye
Similarly, Sensex (30818.61, +622.44, + 2.06%) can test 31000 and can even move up to 32000 in the short term while maintaining above 30000. However, it will need to break 32000 resolutely to become bullish for further increase and also to completely eliminate the danger of falling below 30000.
The Energy Information Administration (EIA) reported a fall in US stocks by 5 mln barrels in the week ending May 15, leading to an increase in crude prices. This was against analysts’ expectations of seeing a 1.15 mln barrel build as mentioned yesterday. Gold and silver have dipped a bit, but could be in a corrective decline right now only to rebound later. Copper has risen further, indicating a possible bullish move coming up almost to the medium term above 2.40.
Brent (35.99) and Nymex WTI (33.64) have risen sharply, contrary to our expectation of seeing a dip initially from $ 35 and $ 33 levels, respectively. While the increase above said level is sustaining, we can expect a rise against $ 37.50 for Brent and $ 35 for WTI in the short term. We do not cancel a possible dip in the short term, but can be seen from slightly higher levels.
Gold (1745.30) and silver (17.82) dipped after a sharp rise seen yesterday. The initial levels to look at Gold would be 1740 and lower by 1720, which is important to break in order to strike bearish for the near term. While over 1720, gold could remain fixed in a range of 1720-1760. On the other hand, silver is dipped a bit, but we may not be able to drop a possible increase to 19 when the current correction dip is over. The current decrease is likely to be limited to 17.50 / 30.
Copper (2.46) has risen sharply, setting a bullish tone in the near to medium term. A gradual rise to 2.50 / 55 could be on the cards for the upcoming sessions, while the 2.40 on the downside remains as immediate support.
The dollar index is stable, while the Euro can rise to test immediate resistance. EURJPY is bullish in the short term but may fall if Euro does not move up from here. The Aussie varies, while Pound could see a slight fall before rebounding from there. Yuan and Rupee look stable near current levels.
Dollar index (99.35) has important support near 99, which if retained could take the index higher back to 100.0-100.5 in the short term. While it is over 99, it looks bullish in the short term.
Euro (1.0962) could test resistance near 1.10-1.1015, which if teams could push Euro back against 1.09 in the short term.
Dollar-Yen (107.64) is currently stable but has the opportunity to test 108 or higher in the short term. 107.40-108.20 may be the interval in the short term.
EURJPY (118.03) has risen alongside the Euro. We are keeping our upward target of test 119 intact in the short term. Near term looks bullish. Only if the Euro falls from current levels can we expect a dip in EURJPY before a test of 119.
The Aussie (0.6561) has risen slightly. As mentioned yesterday, we may be looking at trading within the 0.65-0.66 region in the near term.
Pounds (1.2198) fell again to levels below 1.22. Support is seen at 1.21 and below near 1.2070, but we may not look for a test of these supports and expect a jump from current levels or slightly lower. The immediate outlook looks bearish, but in the medium term, a rise of 1.24 can be seen.
USDCNY (7.1035) is trading above 7.10 and could be bullish against 7.1250 in the short term unless a sustained break below 7.10. The outlook is stable in the short term.
USDINR (75.80) can trade in the region 75.50-76.00 in the short term. The wide 50p range probably lasts for 2-3 sessions.
U.S. government bond yields are reversing as the opponents mentioned yesterday hold up well. The chances of an increase we expected are now reduced and yields can dip to test their support now. The auction for the new 20-year-old has met the demand for a 1.22% yield, according to news releases. German interest rates remain higher and remain supported by the news of France-Germany proposing to set up a joint relief fund. German interest rates have room to move up in the short term before returning lower. 10Yr GoI can dip to test its support zone of 6% -5.95% and then turn higher again.
US 2Yr (0.16%), 5Yr (0.32%), 10Yr (0.66%) and 30Yr (1.38%) are dipped a little further over tenors. The 1.43% resistance on 30Yr holds well, and a dip to 1.30% is likely to appear in the short term. However, a strong break below 1.30% will be needed to reverse the outlook bearish. While 1.30% holds, there is a possibility of a return to 1.40% -1.43% again, and it will keep the options for 30Yr by breaking the 1.43% -1.45% resistance zone alive. 10Yr on the other hand has fallen from 0.70% by itself and can dip to 0.60% -0.58%. It can continue to consolidate in the range 0.58% -0.70% / 0.75%.
The German 2Yr (-0.69%), 5Yr (-0.67%), 10Yr (-0.47%) and 30Yr (-0.06%) yields remain higher but stable. Our view remains the same. There is room on the head for the dividends to move further in the short term. The 10Yr test -0.40% and the 30Yr can inch higher to 0.05%. Then the yields can fall back and resume their overall downward trend.
10Yr GoI (6.0413%) remains lower, keeping intact our view of testing the 6% -5.95% support zone before returning higher again. However, as mentioned in the evening comments yesterday, the pace of downward movement is slower, and there are high chances that the yield may turn higher from 6% per se.