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Market Morning Briefing: US Dollar Index Has Dipped From Levels Above 99.50

STOCKS

Blood bath across the global equities as the fear of corona virus spreading outside China is jolting the market sentiment. All major indices have tumbled and are under pressure. However, on the charts the indices are coming closer to crucial supports which have the potential to halt the current fall caused by panic selling. For instance, 27850-27800 on Dow, 13000-12900 on DAX, 2950 on Shanghai are key levels from where a bounce-back move is possible. As such we will be watching closely for a reversal from these supports rather than becoming more panic.

Dow (27960.80, −1,031.61, -3.56%) has tumbled well below 28650 (from where we had expected a bounce) as against our expectation. 27850-27800 is a crucial support zone to watch now which needs to hold in order to avoid further fall. A strong bounce from this support zone may have the potential to take the index back to 28500 and 29000 again. We will have to wait and watch the price action over the next few days closely.

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DAX (13035.24, −544.09, -4.01%) has declined sharply as expected and indeed much below our expected level of 13200. Crucial support is now in the 13000-12900 region which will need a close watch. While this support holds, a bounce-back move 13200-13400 can be seen in the near-term which in turn can avoid the danger of seeing a further fall to 12600.

Nikkei (22686.61, −700.13, -2.99%) has recovered well after tumbling to a low of 22335.21 today. It will have to be seen if it manages to close above 22800 today or now to see whether the fall below 22800 is just a false breakout of the 22800-24140 sideways range. Only a strong close below 22400 will be bearish going forward.

The resistance at 3050 has held well and Shanghai (2984.60, −46.63, -1.54%) has come-off below 3000 again. The index is in a corrective fall and can test 2950 in the near-term. We expect the downside to be limited to 2950 and a bounce-back move is possible eventually to keep the uptrend intact for testing 3100 on the upside.

Nifty (11829.40, -251.45, -2.08%) has tumbled towards 11800 as expected yesterday. A head and shoulder pattern on the 3-Day chart leaves the chances high of the index tumbling further to 11600-11550 in the coming days. A strong break below the immediate support levels of 11800 and 11750 can trigger this fall. Resistance will now be in the 11950-12000 region.

Sensex (40363.23, -806.89. -1.96%) has declined sharply below 41000 and can now test 40200-40000 as mentioned yesterday. The outlook is bearish. While below 41000, Sensex can break 40000 and extend the fall even up to 39500.

COMMODITIES

Gold and Silver have dipped a bit but doesn’t look like a sharp reversal yet while above immediate supports. A further rise after a brief dip looks more likely. Rising Gold amidst strong US Dollar is surprising but this reversal in directional correlation could be short lived. Copper could be ranged for the next few sessions. Crude prices trade slightly lower but can be bullish for the medium to long term.

Gold (1657.40) and Silver (18.57) have dipped slightly from higher levels seen yesterday. But the earlier resistance turned support on Gold near 1640 could hold well for the near term possibly keeping Gold above 1620/40 region in the next few sessions. Silver on the other hand could remain above 18 and eventually rise to test 19.

The bounce from 2.50 seen in the 1st week of Feb’20 has held well but whether it indicates a longer term uptrend is still to be confirmed Weekly charts show possibility of a test of 2.45 on the downside and cannot be negated while price is below 2.60. Currently Copper (2.5870) trades below 2.60 and could remain in the 2.60-2.55 region for the very near term.

Brent (56.72) and Nymex WTI (51.74) have also dipped slightly. While 60 holds on Brent, there is scope for a fall towards 56-54 before a bounce back is seen while WTI is likely to hold above crucial support at 50.

FOREX

US Dollar Index have dipped a bit taking up Euro and dragging down Dollar Yen lower. EURJPY is rising but the rise looks limited for the near term. Aussie could remain weak despite recent rise from support levels. Pound may trade below 1.31 and could be bearish. USDINR is likely to test crucial near term resistance from where a rejection looks possible. Overall concerns from China still linger to impact the markets.

US Dollar Index (99.23) has dipped from levels above 99.50. It is to be seen now whether this fall is able to sustain for a fall below 99 eventu