STOCKS
Equities gain momentum and keep the broader bullish view intact. DAX, Nikkei, Sensex and Nifty look bullish to see further rise in the coming days. But Dow has an important resistance coming up which has to be broken for it to move further higher. Shanghai remains mixed and seems to lack strength.
Dow (27462.11, +114.75, +0.42%) has risen further and is heading towards the crucial resistance level of 27600. As mentioned yesterday, what happens after 27600 is going to be very crucial to see whether the Dow will go up further to 28000 or fall-back to 27000 and lower. The price action in the coming days will need a close watch.
DAX (13136.28, +175.23, +1.35%) has surged above 13000 and can now test 13200. A strong rise past 13200 will then pave way for 13400 and 13500. Near-term support is in the 13000-12950 region.
Nikkei (23195.01, +344.24, +1.51%) has risen past 23000 and has reduced the chances of seeing a corrective fall that we had expected last week. While above 23000 the index has the potential to target 24000-24200 on the upside.
Shanghai (2970.48, -5.02, -0.17%) seems to be lacking strength to move higher. The near-term outlook is mixed. Shanghai has to sustain above 2950 and break 2980 decisively to gain strength and move higher towards 3000 and higher levels.
Nifty (11941.30, +50.70, +0.43%) Sensex (40301.96, +136.93, +0.34%) have come-off from their day’s high. It will have to be seen if they can sustain above 11900 (Nifty) and 40250 (Sensex). While above 11900, Nifty is bullish to test 12000 and 12200. Sensex on the other hand can target 41000 and even higher levels while it sustains above 40250.
COMMODITIES
Gold and Silver have dipped a bit as Dollar Index rises after positive comments from US trade negotiations with China hinted that we could be closer to a deal. Copper looks bullish. WTI is trading below crucial near term resistance unlike Brent which seems to have some more room on the upside. Watch price action on WTI; if resistance holds, it could drag Brent lower from current levels.
Gold (1508.50 and Silver (18.02) have dipped from levels seen yesterday as US Dollar strengthened. Gold has held below 1525 but has important support at 1500. Gold is likely to trade within 1525-1500 for a few more sessions. Possible extension on either side could be towards 1480 and 1540 respectively. Silver continues to trade above daily trend support and looks bullish for the near term.
Copper (2.6695) is trading along immediate support on the daily candles and while that holds, Copper looks bullish for the near term targeting 2.70-2.725. Support below current levels seen at 2.65 and 2.6250 respectively.
Crude prices have moved up. Brent (62.08) has risen sharply and could possibly rise towards 63-64 on the upside as seen on the weekly candle chart. The near term bullish view remains intact while Brent trades above 59. Note that the crude may see some volatility in the coming sessions with a broad range of 59-64 that could hold at least for a week.
Nymex WTI (56.47) has also risen but has crucial tend resistance on the 3-day and weekly charts which if holds could drag Brent lower towards 59 again. Else, if WTI breaks higher, it could be bullish towards 58-60 region pulling up Brent along with it. Both possibilities look equally possible. Hence we would wait to see price action near current levels.
FOREX
Dollar Index (97.59) rose sharply from 97.11 itself contrary to our expectation of a rise from 97.00-96.89 levels as comments from the US-China trade negotiations hinted a deal coming closer. However, unless the deal actually takes place, markets could continue to remain volatile on news from US-China negotiations. While the rise sustains, Dollar Index could move higher towards 98 within the current move.
Euro (1.1124) has come down sharply in line with our expectations but did not breach 1.11795 on the upside. Possible double top formation looks likely if seen on the daily charts and if that holds valid, we may expect a sharp fall towards 1.1075 just now.
Dollar-Yen (108.78) has been rising well since the past 3-sessions as support near 108 is holding well. There is scope of testing 109.50 in the near term before we see another dip from there. Maximum extension on longer term charts is seen near 110, a breach above which looks difficult for the medium term. While the medium term view would be bearish from 110, we may have room just now towards 109.50-110 that could hold at least for the next 1-2 weeks.
EUR-JPY (120.98) remains to trade in the 120.5-121.5 region and needs to break on either side to indicate more clarity on further direction.
Pound (1.2881) is trading lower ahead of the BOE meeting due on 7th Nov’19 (Thursday) and could test 1.28-1.26 on the downside while below 1.30. Immediate view is bearish.
Aussie (0.6884) has also dipped from weekly resistance near 0.6925. While the resistance holds Aussie looks bearish towards 0.68 in the near term.
The USDCNY (7.0247) is almost stable. We could see trade above support at 7 in the near term.
Dollar-Rupee (70.78) is likely to trade above 70.55 and could rise towards 71 on the upside.
INTEREST RATES
Strong equities on increasing risk aversion in the market on the back of the easing concerns of the US-China trade war has taken the US Treasury yields higher. However, the Treasury yields have important resistance coming-up now which has to be broken to avoid a fresh fall. The German Yields remains mixed/consolidative within its overall uptrend. The Indian 10Yr (07.26 GS 2029) has an immediate resistance ahead which if broken can take it further higher.
The US 2Yr (1.59), 5Yr (1.60%), 10Yr (1.79%) and 30Yr (2.28%) Treasury yields have risen back sharply thereby reducing the chances of the fall mentioned yesterday. The 10Yr has an important resistance at 1.82% which needs to be broken for it to rise further. While this resistance holds, we expect it to come down towards 1.65%-1.60% eventually. The 30Yr on the other hand has more room on the upside that the 10Yr and can rise to 2.40%-.2.42% if it manages to breach 2.32%.
The German 2Yr (-0.66%) and 5Yr (-0.60%) yields remained stable while at the far-end the 10Yr (-0.35%) and 30Yr (0.19%) moved up by 3bps and 7bps respectively. The 30Yr has broken the range above 0.17%. While above 0.17%, a further rise to 0.28% is possible in the near term. The 10Yr however, is still stuck inside the -0.41% – -0.35% and is now poised at the upend end of the range.
The 10Yr (07.26 GS 2029) GOI (6.6875%) has moved up yesterday and has a key resistance coming up in the 6.70%-6.72%. A strong rise past 6.72% will pave way for a further rise to 6.75% and 6.80% in the near term.
The 10Yr (06.45 GS 2029, 6.4753%) on the other hand has an important resistance at 6.48% which has to be broken for it to move higher towards 6.50% and 6.52%
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