Technical Analysis

Daily rupee call: 72.30 continues to block INR bulls

Akhil Nallamuthu | Updated on February 25, 2021

The rupee (INR) retained its positive bias on Wednesday after a gap-up open, where it ended the day with a gain of 0.2 per cent versus the dollar (USD). That is, after opening at 72.37 versus the previous day’s close of 72.46, it closed at 72.32 after making an intra-day high of 72.26. Thus, the resistance at 72.30 stays valid and is giving the rupee bulls a tough time.

If INR decisively breaks out of 72.30 on the back of the bullish bias, it can advance to 72.15. A breach of that level can take the domestic unit to 72.00. But if it loses traction and depreciates from here, it can find support at 72.45 and 72.55. Subsequent support is at 72.70.

Dollar index

The dollar index, which rallied during the first half of Wednesday’s session, reversed the trend in the second half after making an intra-day high of 90.43 and wrapped up the day at 90.06. Today, after a flat open, the index is showing a bearish bias and is now testing support at 90. This is an important support from the short-term perspective and a breach of this can intensify the sell-off, which is positive for the Indian currency.

Trade strategy

The rupee has opened on a flat note at 72.30 and has declined slightly to 72.36 now. So, the resistance at 72.30 remains valid and INR cannot establish a rally unless this level is taken out. But this may not be easy given that the rupee has fallen after hitting this level thrice in the past one week, showing that it is a strong resistance.

Since the risk-reward ratio is favourable for short positions, traders can risk selling INR for intra-day with tight stop-loss. Stick to the stop-loss strictly, as a decisive breach of 72.30 can result in a sharp rally.

Supports: 72.45 and 72.55

Resistances: 72.30 and 72.15

Published on February 25, 2021

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