Tuesday, November 15, 2011
Italian Debt Still Troubling Market
U.S. Dollar Trading (USD) sentiment reversed again last night with Italian bond yields once again heading towards 7% and negative headlines out of Europe prompting risk off trade. Also dampening sentiment is a growing trade spat between the US and China as the two superpowers clash over the strength of the Chinese Yuan. In US stocks, DJIA +259 points closing at 12153, S&P +24 points closing at 1263 and NASDAQ +53 points closing at 2678. Looking ahead, October Retail Sales forecast at 0.3% vs. 1.1% previously.
The Euro (EUR) The came under heavy selling pressure after opening on a strong footing after news on the weekend of a new Italian Government. When yields did not fall at the start of Europe the market sold the Euro aggressively and a solution to the crisis does not seem clear. Support was found under 1.3600 but sentiment is negative. Looking ahead, Q3 GDP forecast at 0.2% vs. 0.2%..
Oil & Gold (XAU) Gold failed to test $1800 instead fell back on USD strength finding support at $1775. Oil was similar to Gold failing to test its key level instead falling back on rising risk aversion in global markets.
RUPEE Bull Flag Pattern Breakout 3 months view
Rupee: Support 47.40 – 49 – 50 Pivot 50.60 Resistance 51.60 – 52.20 – 53.80
Rupee: A Flag (Bullish) follows a steep or nearly vertical rise in price, and consists of two parallel trend lines that form a rectangular flag shape. The Flag can be horizontal (as though the wind is blowing it), however it often has a slight downtrend. The vertical uptrend, that precedes a Flag, may occur because of buyers' reactions to a favorable company earnings announcement, or a new product launch. The sharp price increase is sometimes referred to as the "flagpole" or "mast". Flags are very similar to Pennants. However, with a Flag, the price trend lines tend to run parallel, whereas with a Pennant, the price trend lines tend to converge. A bullish signal occurs when the price rebounds beyond the upper trend line of the Flag formation, and continues the original upward price movement. This is considered a pattern confirmation.
Looking at the chart of Rupee has started its rally from 44.80Per$ and after testing the higher level of 50.5 per$ it has been in the consolidation phase where on lower side it was taking support at 48.98 and 48.86 per$ just below 49 per$ and reversal in prices were seen from lower level. On higher side it was facing resistance at 50.5 per$ to 50.6 per$ and selling was seen from higher level. Recently it’s showing sign of give positive Breakout above 50.65 per$ indicating breakout of the Bull Flag pattern. Pole of the Flag started from 44.8 per$ to 50.5 per$ where the difference comes to 5.7 where if we look at breakout above 50.65 per$ expected target comes to 56.35 per$ in medium term. On the way up we might look at some resistance at level of 52 per$ and above 52 small resistance can also bee seen at 53.5 per$ and 55 per$ where some intervention can be expected from RBI side which might halt the Rupee for short term.
RAJEEV DARJI
9820987859
Daily Nifty & Rupee Outlook for 15th Nov 2011
Nifty: Nifty yesterday which opened gap up above 100 DMA at 5237 and after opening correction started where it traded below 5200 and tested the lower level of 5146 and closing was also seen at days low? Today as the Asian market is trading flat and negative where Nifty is expected to take support at falling trend line of 5125 level. Short bounce can be expected which can be used as a selling opportunity where near term resistance is seen at 5215 level and till the time this resistance hold selling is advise around 5160 – 5180 level. in the last trading session after the gap down opening. On lower side if sustain trading is seen below 5120 will bring to 5070 to 5000 level in near term. Immediate resistance is seen at 5200 and its expected to hold the resistance level and we maintain bearish view where 5000 is the next target and below 5000 can also test 4700 level in medium term. Stochastic which were in down trend just below 20% zone has given negative intersection and if the resistance is holding may again turn negative.
USD/INR: Rupee in the previous session which open at 50.10 per$ hold lower level support of 50 per$ and sharp reversal in price were seen and traded above 50.25 and tested days high of 50.57 per$ and closing was also seen near the higher level at 50.48 per$. Today’s after gap up opening near 50.54 per$ slight if sustain trading above 50.6 per$ is seen will give a fresh breakout in market where uptrend will continue and will move to test 50.9 per$ immediately. Rupee will give a Bull Flag Pattern Breakout if todays closing is seen above 50.65 per$ where in near term 52 per$ to 55 per$ will be the target. Dollar index is trading just above 77.5 level at 77.58 and is taking support at 77 and if some reversal in price is expected where on higher side 77.8 and 78.4 can be retested. Rupee is expected to trade in range of 50.55 per$ to 50.95per$ for the day with buying at dips advise. Stochastic are trading just below overbought zone with positive intersection where some rise in price is expected.