Technical Analysis

Be cautiously bullish on rupee

Akhil Nallamuthu | Updated on March 17, 2020 Published on March 17, 2020

BL Research Bureau

The rupee (INR) has opened higher today, at 74.14 versus yesterday’s close of 74.27 against the dollar (USD). Yesterday, it weakened against the dollar and registered an intraday loss of 0.5 per cent. The year-to-date loss is about 3.9 per cent.

The recent price action during the past few trading sessions indicates that the rupee is treading between 73.5 and 74.5 and unless it breaches either of these levels, the next leg of trend cannot be confirmed. Above 73.5, the immediate resistance is at 73.3, above which it can advance to 73. Below 74.5 i.e. the all-time low, it might be dragged to 75.

What is not encouraging is the selling trend of Foreign Portfolio Investments (FPI). They have net sold ₹51,186 crore (equity and debt combined) for the current month as per the data by National Securities Depository Limited (NSDL). If the scenario continues, the domestic currency will be subject to further selling pressure.

Dollar index:

The dollar index moderated yesterday but remained above both 21- and 50-day moving averages. Until the price remains above 97.75, the index will be biased towards the upside. Resistance levels on the upside are at 98.5 and 98.8. But if the index extends the correction, the immediate level of support is at 97.75 with the subsequent support at 97.2

Trade strategy:

The rupee is less likely to breach all-time low today, and it has minor support at 74.25. Hence, for intraday, traders can buy rupee on intraday declines with stop-loss at 74.55

Supports: 74.25 and 74.5

Resistances: 74 and 73.5

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Published on March 17, 2020
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