Technical Analysis

Daily Rupee call: Go long above 73.6

Akhil Nallamuthu | Updated on October 23, 2020 Published on October 23, 2020

BL Research Bureau

The rupee (INR) was trading in a sideways trend yesterday and ended the session flattish at 73.53 versus preceding day’s close of 73.58. So, the local currency has closed below the support of 73.5, indicating a bearish bias. However, the support of 73.7 has been acting as a solid base for the rupee.

If INR bounces off the support of 73.7, it will most likely retest the resistance of 73.5. A breach of that level can lift the domestic currency to 73.3. But if the bears gain grip and drag the rupee below 73.7, it can decline to 74 – a considerable support. Subsequent support is at 74.1.

The Foreign Portfolio Investors (FPI) has been upbeat on the domestic market this week, and the inflows continue to come in at significant levels. On Thursday, the net investments of the FPIs were recorded at ₹1,118 crore (equity and debt combined). With that, the net inflow for the week has risen to nearly ₹6,470 crore. A continuation of this trend can positively impact the domestic currency.

Dollar index

The dollar index closed with a marginal gain yesterday following a sharp fall in the preceding trading sessions. Today, after beginning the session flat, is testing the resistance of 93. Immediately above this resistance is the 50-day moving average at 93.25. Since the overall trend is bearish, the index is likely to resume the downtrend, which can be positive for the Indian currency.

Trade strategy

After opening with a gap-down, the rupee is attempting to recover. But 73.6 can be a hindrance. Considering this, traders can initiate fresh rupee long positions if it breaks out of 73.6. Stop-loss can be at 73.75.

Supports: 73.7 and 74

Resistances: 73.5 and 73.3

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Published on October 23, 2020
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