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BL Research Bureau
The rupee, after taking support at the important level of 71 against the dollar, rose through the first half of the session yesterday. However, after making an intraday high of 70.86, it gave up its gains, ending the session at 70.97. Though it managed to close above the support of 71, the recent developments in price action indeed indicate weakness.
In case if the domestic currency breaks below 71, it will most likely depreciate to 71.2. But, if the support holds and the rupee rebounds, it will face a hurdle at 70.75, beyond which the resistance is at 70.5.
The dollar continues to trade with a negative bias, and as a result, the dollar index trades below the key level of 97. The index is currently trading at 96.87, and it has a support band between 96.35 and 96.5. Below those level, the index could test the support at 96. For the index to establish a sustainable rally, it should decisively close above 97.
Trade strategy:
The rupee has opened today’s session at 71.02 versus its previous close of 70.97. Though it is hovering around the critical level of 71, the recent downward pressure seems to be sustaining, and it may drag the local currency lower. Hence, traders can short rupee for intraday with stop loss at 70.7.
Supports: 71.2 and 71.4
Resistances : 70.75 and 70.5
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