The market heads down as oil price goes parabolic

FullscreenTap to expand

The global risk scenario weighs the market today as Brent crude trades near $110 bbl, rising sharply after crossing $100 mark and ECB rising rates by 25bps.

The global central banks are gearing up for Yen Carry Trade Unwinding(click to understand yen Carry trade), BoJ insiders have been hinting for not just rate hikes a but much bigger plan to strengthen Yen that goes through dumping US treasuries and reserve currency.

As Yen gets stronger, the institution who have funded investments globally using ultra cheap Japanese money and weak Yen, will run to cover thier loans before the FX losses hits hard. This means Sell Off in global assets.

Technically, we may see short covering today in the 2nd half to 23400/23500 due to oversold level on daily chart and could even extend to 23600, but sustaining gains over few day looks less likley unless we see some bigger outcome form BRICS Summit over weekend.

Technical support remains 23000-23100, IndiaVix is trading at 12.35, sustaining above 12.20 may increase volatility and risk in the market in coming week post BRICS.

—————————-
By closing below 24000 Nifty has entered into the larger picture with downside potential to 23000-22500. Read below…

FullscreenTap to expand

Nifty completed 61.8% retracement the entire fall at 24752 during consolidation, and has now breached below the trend line support of 24000, resuming down trend to 23000-22500 level.

23600-23500 zone may act as 1st deterrence level post breakdown below 24000, on oversold readings and short-covering leading to re-testing of breakdown area near 24000 and BRICS positive optimism from BRICS summit.

BoJ Interest rate policy is the key event to watch out for which may act as trigger for rest of the Macro issues surfacing in the market dynamics, and a global sell-off scenario.

___ ___ ___ ___ ___ ___ ___