Technical Analysis

Daily Rupee call: Go long in INR with stop-loss at 74.10

Akhil Nallamuthu BL Research Bureau | Updated on December 23, 2020 Published on December 23, 2020

Recovering from the day’s low of 73.96, the rupee (INR) ended Tuesday’s session at 73.84 against the dollar (USD). Nevertheless, it was down marginally compared to the preceding day’s close of 73.78.

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On Wednesday, the INR opened at 73.89. From this level, the local currency has a strong support at 74. So, if it appreciates from here, it can rally to 73.70. Above this level, the resistance can be spotted at 73.50. But if bears gain strength and drag INR below 74, the likelihood of a sharp decline is high. Support levels below 74 are at 74.25 and 74.35.

After a significant fall on Monday, the market rebounded strongly on Tuesday. The positive sentiment is also reflected in the foreign portfolio investor (FPI) numbers. The net investment yesterday was recorded at ₹1,153 crore (equity and debt combined) and this largely helped the rupee to stay afloat against the dollar despite bearish opening. If the recovery continues, more inflows can be expected, which can help the Indian currency.

Also read: Fundraising via bonds hits a peak at ₹7.45-lakh crore

Dollar index

The dollar index posted a gain of nearly 0.7 per cent on Tuesday as it closed at 90.65 versus its previous close of 90.04. But despite the rally, it remains below the key level of 91 and, unless this resistance is breached, the rally cannot be counted as a trend reversal. Probably a breakout of 91 can turn the short-term trend bullish.

In fact, today, the index has been inching down since morning and is currently trading at 90.50. A fall from here means a weak dollar that can be positive for the rupee.

Trade strategy

The rupee has opened today’s session marginally lower at 73.89. However, it has an immediate support at 74, which works well for INR longs given the risk-reward ratio; also, the dollar index looks weak for the day. Given these factors, traders can go long in INR with stop-loss at 74.10

Supports: 74.00 and 74.25

Resistances: 73.70 and 73.50

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Published on December 23, 2020
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