Daily forecasts on global Stocks, Commodity, Forex and Interest Rates markets
18 May 18. 0857 IST or 0327 GMT or 2327 EST


STOCKS

Dow (24713.98, -0.22%) is stable around the 24750 level and trading below the daily trend resistance. While the resistance holds, a gradual fall towards the 21-day MA near 24380 is possible. Near term looks bearish.

Dax (13114.61, +0.91%) moved up sharply contrary to our expectation of a short dip to 12950-12900.While above 12900, we may expect the index to move up towards 13200-13300 levels in the coming sessions.

Nikkei (22895.49, +0.25%) looks strong on the daily candles and while the channel uptrend holds, the index could eventually move up towards 23200-23400 in the near term. View remains bullish for Nikkei in the near to medium term.

Shanghai (3163.27, +0.28%) is coming off from resistance near 3200 as expected and could gradually come down to re-test 3100 or even lower by next week.

Nifty (10682.70, -0.54%) did come down yesterday as expected and could target 10600 over the next 1-2 sessions. While below 10800-10700, there is scope for the index to come off towards 10400 in the medium term.

COMMODITIES

Brent (79.58) is trading higher and the bulls look strong just now. Brent could move up to test 81 in the coming sessions before seeing a short dip towards 79. Nymex WTI (71.74) on the other hand has interim resistance near 73 which may hold for now and push the prie to 70. But in case 73 breaks on the upside, 74-75 is a good possibility on the upside for WTI.

Looking at the Brent-WTI spread (7.97), it has sharply broken above the 7.50 channel resistance and while the spread looks bullish, the crude prices may continue to move up.

Gold (1288.10) is testing important near term support at 1275/80 levels and while that holds, a short bounce back towards 1295-1300 could be seen next week. In case the support at 1275 breaks, Gold could be vulnerable to a sharp fall in the coming weeks opening up chances of testing 1250 on the downside. Watch price action near 1275 just now.

Silver (16.43) is trading in a narrow range on the weekly candles between 16 and 17 respectively (with 17.50 as an upside extension). Immediate rise towards 16.75 is possible in the coming sessions.

FOREX

Dollar index (93.45) dipped to a low of 93.12 yesterday but didn’t test support on daily candles. This test of support at levels near 93.25-93.00 could happen in the next few sessions, after which the Dollar Index should continue its uptrend towards 94-95. The upside could be capped by levels near 95.

Euro (1.1804) saw a high near 1.1837 yesterday but didn’t test resistance in the downward channel on daily candles. It could still see some correction (upward) towards 1.182 (and if it breaches that, then towards 1.185). However, as mentioned yesterday, a test of levels near 94-95 by the Dollar Index would imply the Euro testing levels near 1.17-1.16.

Dollar Yen (110.96) has already tested a high of 110.99 and looks like it could breach our earlier upside target of 111. The revised upside target would be 112 which also corresponds with crucial long term resistance on weekly candles. In the near term, it could first rise a little more towards 111.50, then see correction towards 110.75-110.50 and then rise back again towards 112.

Euro Yen (130.98): After testing support on 3 day candles on Wednesday near 129.5, Euro Yen has bounced and could now move towards resistance near 131.5-132.0 on daily and 3 day candles. This could sync well with our predicted rise in Euro and Dollar Yen towards 1.182-1.185 and 111.5 respectively.

Pound (1.3516): Pound could be beginning a phase of ranging between the levels 1.345 and 1.36 (possibly extending upto 1.37). It could rise towards 1.36 in the next 1-2 sessions now. In the medium term however, Pound looks bearish.

Dollar Rupee (67.7050): Uptrend in Dollar-Rupee remains intact with good Support at 67.50.

INTEREST RATES

US yields are seeing a rally after US retail sales data last week met expectations. Moreover, the expected rate hike in the June Fed meeting also seems to be leading to a bond selloff. This has been exactly in line with our expectation.

Targets for US yields in the current rally are as follows:
3.2%-3.3% (10 Year), 3.4%-3.5% (30 Year), 3.15% (5 Year) and 2.75% (2 Year)

US 10 Yr Yield (3.12%), 30 Yr (3.26%), 5 Yr (2.94%), 2 Yr (2.57%): The 30 year yield and 5 year yield have seen a decisive breach of resistances near 3.2% and 2.9% on short term charts and are now expected to move beyond 3.3% and 3% soon.

As mentioned yesterday, the German 10 Year – US 10 Year yield spread (-2.48) has broken below immediate support on medium term and long term charts as the US 10 year is continuing its rise while the German 10 year yield remains near 0.60%-0.65%. If this break persists, we might revisit our prediction of a rise in the spread towards -2.3%. In that case, the spread might turn bearish towards long term channel support near -2.75%.


Author: Kshitij Consultancy Service
Website: http://www.kshitij.com
Kshitij Consultancy Service