The opponents of the Dow (24700-25000) and DAX (11200-11350), as we mentioned yesterday, are doing well now. Unless these resistances are violated, the indices are likely to continue their sideways consolidation for a longer period. Nikkei stays taller and has room to move up in the short term. Shanghai may remain stuck in a narrow range. Sensex and Nifty appear to lack strength and remain vulnerable to falling further, unless rising above 31,000 and 9000, respectively.
The Dow (24206.86, −390.51, -1.59%) has begun giving back some of the gains on Monday. Resistance region 24700-25000 seems to hold up well now. A break below 24000 will lapse the chances of further increase and will pull the Dow lower to 23000-22500 again. In this case, the 22500-25000 series will remain intact for a long time. As mentioned yesterday, a strong rise past 25000 is needed to become more bullish to see further increase to 26000.
DAX (11075.29, +16.42, + 0.15%) tested the resistance at 11200 and has come from there. While below 11200, chances are it will dip below 11000 and test 10800-10700 in the short term. As mentioned yesterday, 11200 and 11350 are important resistors, and a strong rise past 11350 is required to gain momentum and target 11500 and higher levels.
Nikkei (20584.64, +151.19, + 0.74%) remains higher and is likely to take 20800 now as mentioned yesterday. . A strong break above 20800 will then take Nikkei higher to 21000 and 21500 eventually in the coming days. 20500 and 20000 will continue to serve as good supports now.
Shanghai (2891.40, −7.17, -0.25%) appears to lack momentum on the 2900 violation. Given that narrow sideways consolidation between 2900 and 2875 seems like an option now. A breakout on either side of 2875-2900 will then determine whether Shanghai will go up to 2925-2950 immediately, falling to 2850-2825 first before resuming the overall increase.
Bounce in the Sensex (30196.17, +167.19, + 0.56%) and Nifty (8879.10, +55.85, + 0.63%) seen yesterday seems to be lacking momentum. Nifty failed to maintain the break above 9000 and Sensex on the other hand remained below 31000. This holds the chances of seeing a fall to 29000 on Sensex and 8500 on Nifty while remaining below 31000 and 9000 respectively. A break below 30000 on Sensex and the 8800 on the Nifty can trigger this fall.
The American Petroleum Institute (API) estimated a crude stock haul of 4.8 ml barrels in the week ending May 15, against analysts’ expectations of seeing a 1.15 ml barrels build. Commodity trading is a bit lower and can dip a little while immediate resistance holds. Gold and silver are on the rise and look bullish for the near term. Copper holds above 2.40, and while the rise holds, it may be bullish in the short term.
Brent (34.74) and Nymex WTI (31.95) have gone a bit. We expect near $ 37.50 and $ 33 resistance to hold on to Brent and WTI, respectively, and lead to something more profound in the short term.
Gold (1753.70) and silver (18.08) dipped yesterday to give an indication of a possible short-term decline, but have gained momentum again to rise. Note that Gold has temporary supports near 1740 and 1720, which if held can hold Gold higher towards 1760-1780-1800 in the medium term. A break below 1720 is needed to turn bearish for Gold. On the other hand, silver has risen sharply and could be slowly headed toward 19 before a fall from there is seen. Near term looks bullish for silver and gold, while above 16.5 and 1740/20.
Copper (2.4155) has dipped slightly but continues to remain above 2.40, and while the rise continues, we can expect a slow and steady rise in copper towards 2.45 / 50.
Dollar index is trading lower, while Euro and Dollar Yen are trading higher. Pounds also looks bullish, while the Aussie could be stable right now. EURJPY and Yuan could also trade stable right now, while USDINR could test decisive support for 75.60, from which a breach or bounce would set a further direction.
Dollar index (99.45) looks bearish against 99.0-98.73 before seeing a rejection. Scope of 100.75 / 55-99.0 / 98.70 looks likely in the medium term.
Euro (1.0940) has risen well above 1.09 and could test recently high at 1.0976 in the next 1-2 sessions. A break over that would be necessary to take it higher towards 1.10.
Dollar-Yen (107.77) rose sharply yesterday to levels above 108 after the BOJ called for an unplanned meeting on May 22, 20, on a possible new measure to provide funding for financial institutions. A possible fiscal stimulus package of approx. 20% of Japan’s GDP is quoted in news sources. Oddly enough, if the dollar-yen continues to rise from here, would be in negative correlation with the dollar index and positive correlation with gold for a while, which is usually otherwise. While our expected rise to 108 is seen, the couple has come from there right now. Above 107.50, the pair looks bullish for a short-term re-test of 108+ levels. The top goal of 109 could be seen in the upcoming sessions.
EURJPY (117.87) has performed well. A rise above 118, if seen within the next few sessions, may take it higher toward 119 over time. Before this temporary resistance is seen almost 118.38, whose teams can keep the crossover lower.
The Aussie (0.6545) is likely to trade in the 0.65-0.66 region for a longer period. Although the support is at 0.65, we may be looking for a steady increase in the short term.
Pounds (1.2261) have risen contrary to our expectation of a further decline from this. While we are over 1.21, we can look for a test of 1.24 in the short term.
USDCNY (7.1052) has traded around 7.10 and is unable to give a clear picture of a break or rise above the level. A sustained fall below 7.10 would be necessary to look for a fall towards 7.09 / 08 as mentioned yesterday if failure could keep the couple in the 7.1250-7.10 region for a while.
USDINR (75.6450) closed at the lower end of our mentioned 75.60-76.00 range, but it would be important to see if the range manages to hold today as well or breaks below 75.60 to turn bearish towards 75.50 / 40 in the next 1 -2 sessions. Charts suggest support at 75.60 now, which if teams can produce a rebound against 75.80 / 90-76.00.
US Treasury yields remain higher and slowly become bullish for the near term. A strong break over the immediate resistances will confirm the same and pave the way for further increase in the end. The chances of a fall that we expected are less. The German yields have room on their heads to test their resistance and can then resume their overall downward trend. The 10-year-old GoI comes down to test its crucial support zone, where we expect it to bounce back again.
US 2Yr (0.17%) Treasury yield remains stable, while 5Yr (0.34%), 10Yr (0.69%) and 30Yr (1.41%) dipped slightly. The view remains the same. 0.75% -0.80% on 10Yr and 1.45% on 30Yr are the crucial resistors to monitor in the coming days. A strong break over these resistances will be bullish and see 30Yr rising 1.70% and 10Yr targeting 1% upward in the coming days. It also lapses our bearish perception of seeing 0.60% -0.58% (10Yr) and 1.20% (30Yr). In general, bias revolves around bullishness, which requires some confirmation.
German yields of 2Yr (-0.69%) and 5Yr (-0.67%) have fallen higher, while 10Yr (-0.47%) and 30Yr (-0.05%) have dipped slightly. We maintain our view of seeing a short-term increase before the overall downward trend resumes. 10Yr can move up to -0.40% and 30Yr can test 0.05% on the upside before we see a reversal.
10Yr GoI (6.0348%) has dipped further and is heading towards the support range of 6% -5.95% in line with our expectations. As we mentioned, probably 6% -5.95% support the downside support zone and 10Yr GoI can turn higher again from this support zone to target 6.15% -6.20% upside.