Technical Analysis

Daily Rupee call: Go long with tight stop-loss

Akhil Nallamuthu | Updated on August 11, 2020

The rupee (INR) traded flat on Monday ending the session at 74.9 versus the previous close of 74.93 against the dollar (USD). At a broader level, the currency pair remains within the range of 74.7 and 75 and unless either of these levels is breached, the next major price swing will remain uncertain.

Today, INR opened higher at 74.83 and if it advances from this level, it will face resistance at 74.7. A breakout of this level can bring in more bulls, possibly taking the exchange rate to 74.5. But if the local currency weakens and breaks below 75, it will most likely find support at 75.1. Below that level, INR can depreciate to 75.3.

As the markets were inclined to a positive bias, Foreign Portfolio Investors (FPI) were net buyers yesterday, but at a lower scale. The net inflows on Monday stood at ₹303 crore (equity and debt combined).

Dollar index

The dollar index gained marginally yesterday; however, it stays below the resistance at 94 and this level should be breached to turn the outlook positive. Moreover, in the daily chart, the price action indicates a sideways trend where the index oscillates between 93.5 and 94. The direction of the break will decide the trend. Notably, the major trend is bearish and a further decline will be good for the Indian currency.

Trade strategy

The rupee opened with a gain and is currently trading at 74.85, it has support at 74.9 and the nearest resistance is at 74.7. Considering the risk-reward ratio, traders can go long in rupee with tight stop-loss.

Supports: 74.9 and 75

Resistances: 74.7 and 74.5

Published on August 11, 2020

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