Technical Analysis

Daily Rupee call: Go long above 74.7

Akhil Nallamuthu BL Research Bureau | Updated on August 18, 2020

After ending yesterday’s session on a flat note at 74.88, the rupee (INR) has opened higher today at 74.76 versus the dollar (USD). Nevertheless, the currency pair remains within the range of 74.7 and 75.

If INR strengthens and appreciates above 74.7, it can attract considerable buying interests possibly taking it to 74.5. But there is a possibility that it will moderate towards the other end of the range at 75. A break below this level can turn the outlook for rupee negative. It can then depreciate to 75.1 and 75.3.

Foreign Portfolio Investors (FPI), who have so far been very positive this month, were net buyers on Monday as well with net inflow of ₹333 crore (equity and debt combined). The consistent inflows has been helping the local currency and if this trend continues, the rupee will have an upper hand against the greenback.

Dollar index

Bears seem to be gaining traction in the dollar index over the past few trading sessions. After closing in the red for four consecutive days, it is declining today too. Currently trading at 92.6, it is trading near the prior low of 92.52. A breach of this level can strengthen the case for the bears. A fall in the index would be favourable for the Indian currency.

Trade strategy

After opening with a gap-up at 74.76, the rupee is facing a resistance at 74.7. So, even though the dollar looks weak, it is better to go long in rupee once it rallies past 74.7. Hence, traders can buy INR with tight stop-loss if it breaks out of 74.7.

Supports: 74.9 and 75

Resistances: 74.7 and 74.5

Published on August 18, 2020

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