Technical Analysis

Daily rupee call: Initiate short positions in rupee with stop-loss at 70.7

Akhil Nallamuthu | Updated on January 21, 2020 Published on January 21, 2020

At the interbank foreign exchange, the rupee opened at 71.63.   -  istock.com

On Monday, the rupee (INR) traded and closed below the key level of 71 against the dollar (USD). After a flat opening, the Indian currency closed marginally lower at 71.11 versus its previous close of 71.08. The price action indicates further weakening.

On the downside, 71.2 could act as a support, below which the support is at 71.4, where the 50 per cent Fibonacci retracement of the previous uptrend coincides. Alternatively, if the local currency gains traction and appreciates, 71 will act as a strong hurdle. If rupee breaches that level, it can rally to 70.7.

Dollar index

The dollar index gained slightly yesterday, inching up to 97.7. Since the index has managed to trade above the 50-day moving average, there is a greater possibility of it rising. The immediate hindrance will be in the form of a resistance band between 97.8 and 98. On the other hand, if the index declines, it may fall to the support at 97.2, the 21-day moving average.

Trade strategy

One can continue to be bearish until the domestic currency trades below the important level of 71. Hence, traders are recommended to initiate short positions in rupee on intraday rallies. Place stop-loss at 70.7

 

Supports: 71.2 and 71.4

Resistances: 71 and 70.7

 

Published on January 21, 2020
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