Technical Analysis

Daily rupee call: Buy above 71.6

Akhil Nallamuthu BL Research Bureau | Updated on November 26, 2019

There was not much volatility in rupee (INR) on Monday as it opened at 71.7 and closed without much change at 71.73 against the dollar (USD), even though risk-on sentiment prevailed in the market. The Indian currency is hovering around a key resistance area between 71.6 and 71.7.

A breakout of the resistance level will possibly take the rupee to 71.4 whereas if the Indian currency faces selling pressure on the back of resistance, it could decline to 71.88.

The dollar has been rising over the past few trading sessions. As we can observe, the dollar index breached an important hurdle at 98. Currently trading at 98.25, this level is a resistance. If the index breaks out, it will potentially head to 98.5, beyond which it could rise to 99. However, if it weakens, it can be expected to retest 98.

In the off-shore currency market, the one-year Non-Deliverable Forward (NDF) points of the USDINR currency pair softened to 289.5 compared to the previous week close of 296. This represents lesser demand for the dollar in the forward market. The spread for forward has been steadily declining since past one week, a favourable condition for the Indian currency.

On Tuesday, the rupee opened higher at 71.66 versus yesterday’s close of 71.73. Though the market is in a risk-on sentiment which favours the rupee, the resistance at 71.6 is strong. Hence, it is recommended to initiate rupee longs with tight stop-loss if it convincingly breaks out of 71.6.

Supports: 71.88 and 72

Resistances: 71.4 and 71.6

Published on November 26, 2019

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