Technical Analysis

Daily rupee call: INR likely to trade with bearish bias

Akhil Nallamuthu | Updated on September 08, 2020

The rupee (INR) lost 20 paise against the dollar (USD) yesterday as it ended the session at 73.34 versus 73.14 – the previous trading day’s close. Following this, it opened Tuesday’s session with a considerable gap-down at 73.62.

Thus, the local currency has slipped below the support band of 73.4 – 73.5. If it sustains below this, it can drift towards the subsequent support at 73.7. A break below 73.7 can turn the short-term outlook negative, potentially taking the exchange rate of the USDINR to 73.85. But if the INR strengthens and moves above 73.4, it can probably advance to 73.15.

Foreign Portfolio Investors’ (FPIs) were equally split yesterday, resulting in a near zero net fund flow. While the buying amounted to Rs 3,496 crore, they sold assets worth Rs 3,503 crore, and so the net flow stood at minus Rs 7 crore (equity and debt combined). While the strong FPI fund flow has been positive for the rupee in recent weeks, sluggish activity can take the sheen off the Indian currency.

Dollar index

The dollar index closed marginally above the 21-day moving average and the resistance of 93. If it can sustain above that level, it can possibility extend the upward move towards the resistances at 93.4 and 94. The key level for the index is 94 and it should break out of that level to establish a sustainable rally.

Trade strategy

Consequent to the gap-down open, the rupee has slipped below the important support levels of 73.4 and 73.5. Below these levels, the influence of bears can be more and so INR might trade with a negative bias for the day. Hence, traders can initiate fresh rupee short positions with stop-loss at 73.4.

Supports: 73.7 and 73.85

Resistances: 73.4 and 73.15

Published on September 08, 2020

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