Market Outlook - BNP PARIBAS - Investment Services India

This section is classified as non-objective researchTechnical Analysis – Interest Rates & CommoditiesBond & Short-Term Contracts• Europe 10y: Still a ST bottoming/up bias given sustained break above 2.05 (H&S neckline) for 2.41 target• US 10y: Still a ST bottoming/up bias & a possible rising wave “5” scenario to develop towards 2.40/47 target• Short-term contracts h2: Toppish/weak bias on Euribor (2-top) and weak one on ED within MT falling channelEquities & Commodities• WTI (Cl1): Still bottoming/up ST but must break above key 86.24 first and then 90.52 (2-dip neckline) to turn up• Equity markets: Remain weak MT but still with a ST bottoming/up bias developing following ST pattern’s breakUS 10y: ST falling channel and 61.8% still breaking call for 2.40/47 target area MT Trend: Down Range: 2.06/2.30MT SCENARIO remains downThe breaks below 2.50 (LT triangle support),2.33 (2010 low) and then 2.03 (2008 low)strengthened the MT falling bias to reach MT138.2% extension of 2010/2011 rise at 1.78.Main risk if fall resumes below 1.93 (61.8%) isto extend fall beyond 1.67 low printed towards1.50 (LT falling channel support).1.67/1.71 2.47/2.50 => 2.72ALTERNATIVE SCENARIO…Rise extendsA ST bottoming/up bias is now under way,sustained by rising divergences on weeklyRSI, breaking above ST falling channel for amove towards 2.31 (mid-August top) initiallyand then 2.40 (channel breakout target). Notealso on daily chart the risk of a rising wave “5”scenario developing towards 2.47 target.STRATEGYKeep short if you are above 2.06 for2.40/2.47.WTI: Still weak MT but trying to break ST falling channel MT Trend: Weak Range: 83.0/95.0MT SCENARIO is still down74.95 99.89MT bias has turned down oriented followingthe decisive break below the LT risingchannel (98.52/125.12). Indeed, this break isstill targeting the 61.90 area, slightly belowcritical LT support area at 63.89/64.24 (LT61.8% & 2010 low). This move is still slightlydeveloping within a ST falling channel(60.84/86.24), within which the MT bias willremain rather weak but a renewed break nowbelow MT 61.8% (83.57) & 80.51 (61.8%) isneeded to rekindle the latest falling pressure.ALTERNATIVE SCENARIO…ST reboundThe last two months’ bottoming/up biaspersists but it needs now to break decisivelyabove 86.24 (ST falling channel res) and thenespecially 90.52 (2-dip neckline?) to reopenMT way up for at least a pullback towards98.52 (LT rising channel support) andperhaps then 99.89 (ST 61.8%).STRATEGYLong on 87.35 (ST falling channel res) S/L83.00. Add on 2-dip neckline (90.52) break.Christian Sené 20 October 2011Market Mover48www.GlobalMarkets.bnpparibas.com