16 July 2016

RETAIL RESEARCH

HSL Commodity & Currency Focus

Periodical technical report on global commodities and currency

Nagaraj Shetti
nagarajs.shetti@hdfcsec.com
Tel-022-30750021

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Commodity/Currency

CMP

Trend

Support

Resistance

Trading Strategy

Gold MCX

30995

Down

30600

31345

Sell at cmp and sell on rise

Silver MCX

47300

Sideways -ve

46950

48600

Sell below 46900 levels

Brent Crude

$47.98

Sideways -ve

$45.90

$51.25

Sell below $45.90 levels

USDINR

67.16

Positive

66.95

67.50

Buy at cmp and buy on dips

USD Index

$96.15

Sideways

$95.38

$96.80

Positive above $96.85

GOLD MCX:

GOLD MCX-weekly timeframe

Observation:
The global precious commodity of Gold as per weekly timeframe chart has witnessed a sharp weakness during last week
(Gold MCX), as it closed lower by around 724 points, as per w-o-w basis.
The sharp upmove of the previous 3-4 weeks seems to have completed, as this commodity formed a negative candlestick
pattern (type of bearish engulfing) during this week. This could be a negative top reversal pattern and suggests more
weakness in the gold prices ahead.
We observe a symmetrical price movement in Gold MCX as per weekly timeframe chart, as this commodity fell consistently
in the last four consecutive weeks, post sharp upmoves (marked in X). This pattern is hinting the possibility of further
weakness in this commodity price in coming weeks.
The weekly momentum oscillator like 14 period RSI is showing dip down to 62 levels. If weekly RSI slips further below 60
levels, then it could coincide the weakness in the Gold MCX prices.

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Conclusion: The underlying short /near term trend of Gold MCX is weak and one may expect further weakness in coming
weeks. Next lower levels targets for Gold MCX is 30600 and next 30300 levels.
The expected fall in the Gold prices could mean positive bias or sideways with positive trend for Indian and global markets
for coming weeks.
SILVER MCX:

SILVER MCX- weekly timeframe

Observation:
Another precious commodity of Silver MCX as per weekly timeframe chart is indicating an excellent upmove over the last
one month.
The commodity prices have moved up and formed a new swing high of around 48611 levels during last week and is showing
consolidation around the high.
The Silver MCX is now resisting around the area of down trend line (green dashed descending trend line, connecting
important lower tops) in the last couple of weeks, which could possibly result in further consolidation or correction in the
said commodity prices.
The weekly momentum oscillators like 21 period stochastic has reached the extreme overbought levels of 90-95 levels. This
pattern hinting at the possibility of cooling off the upside momentum in the oscillator as well as in the commodity price.
Conclusion: The underlying near term trend of Silver MCX is at the reversal and the overall chart pattern is indicating that
minor weakness could be in store for coming weeks. Next lower levels to be watched is around 45675.
The expected consolidation or correction in the Silver prices could be positive or sideways with +ve bias for the global
markets including Indian market.

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BRENT CRUDE:

BRENT CRUDE - weekly timeframe

Observation:
The Brent Crude as per weekly timeframe chart has been moving into a sideways consolidation pattern over the last one
month, as the commodity prices have moved within a narrow band.
Presently, the Brent Crude has placed at the multiple supports of 20week EMA (pink curvy line) and horizontal line (green
dashed line, which is connecting previous bottoms) around $46 and $46.65 respectively.
We observe a display of lack of strength to move up from the support area and we also notice a formation of long upper
shadows during sideways consolidation, which is signaling an emergence of selling interest at the higher levels.
The current weak sideways pattern in Brent Crude is suggesting a possibility of commodity sliding below the above said
supports very soon. On the occurring such event, one may expect beginning of sharp weakness in the commodity prices.
Conclusion: The BRENT CRUDE as per larger timeframe is showing sideways trend with weak bias. There is also a possibility
that this commodity could slide below the key support levels in near term.
The expected weakness in Brent Crude is however positive for Indian economy, but it is negative factor for the global
markets (especially markets of oil producing countries).
USDINR:

USDINR weekly timeframe

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Observation:
The weekly timeframe chart of USDINR Fut (NSE) has been showing weakness in the last three weeks and this week saw the
pair has bounce back slightly from the lower levels.
The USDINR currency pair is now making bottom reversal pattern around Rs.66.75 (green ascending dashed trend line),
which is suggesting that buying is emerging from the lower levels. This is positive for the pair, which is in turn could be
negative for the INR (Indian rupee).
The weekly 14 period RSI has been finding support at the value area of 48-50 levels and is now making attempt to bounce
back from the lows. This attempt could mean the chance of upside bounce back in the USDINR pair in coming weeks.
Conclusion: The underlying trend USDINR Fut is showing revival and we need confirmation of reversal. On the confirmation
of the upside bounce back, the USDINR Fut (NSE) pair could move up to the high of Rs.68.25 levels in the next 3-5 weeks.
The expected upside bounce back in USDINR is negative indication for Indian Rupee (INR) against US Dollar ($). On the
occurrence of such event could possibly hurt Indian market, where one may expect consolidation/correction in Nifty.
USD INDEX:

USD INDEX weekly timeframe

Observation:
The US Dollar Index (USD INDEX) is an index (or measure) of the value of the US dollar relative to a basket of foreign
currencies, often referred to as a basket of US trade partners' currencies. It is a weighted geometric mean of the dollar's
value relative to other select currencies.
Chartically, the USD Index has been showing a consolidation with small range over the last three weeks (as per weekly
chart), post sharp upmove of later June. It is currently facing resistance at $96.70 (orange dashed ascending trend line).
The formation of sideways structure after a sharp upmove could be considered as an uptrend continuation pattern. On the
upmove above $ 97, one may expect sharp upmove in the currency index. This means that the US Dollar could outperform
against the basket of foreign currencies.
Conclusion: The underlying trend of US Dollar Index (USD INDEX) is sideways and is expected to breakout of the resistance
very soon.
The upside breakout of USD INDEX above the hurdle, could mean strengthening of US Dollar against other currencies (the
basket is excluded Indian currency). Hence, nothing is really predicted for Indian market based on the movement of USD
INDEX.
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