Technical Analysis

Daily Rupee call: Strong support at 73.50

Akhil Nallamuthu | Updated on January 12, 2021

BL Research Bureau

Even as the rupee (INR) opened with a gap-down open on Monday against the dollar (USD), it did not depreciate beyond that level and managed to end the session at 73.38 versus Friday’s close of 73.24. Thus, the support band of 73.40 and 73.50 stays valid, and it continues to offer support.

Following this, INR has opened marginally lower at 73.43 today. If rupee bulls gather momentum on the back of the support band, it can rally towards the nearest resistance at 73.25. Resistance above this level is at 73.15. On the other hand, if the local currency breaks below the support at 73.50, it can face considerable selling pressure. Notable support levels below 73.50 can be seen at 73.65 and 73.80.

What might have saved rupee against the soaring dollar on Monday should have been the foreign inflows. The foreign portfolio investors (FPI) on Monday stood at nearly ₹3,139 crore (equity and debt combined). FPI inflows have been robust in the recent months, and as long as this trend continues, INR can stay steady versus USD.

Dollar index

The dollar index closed with a gain yesterday, and this was the fourth consecutive daily gain. Since registering a low of 89.21 last week, it has recovered strongly, and the momentum seems to be shifting in favour of the dollar. Today, the index has moved up and is hovering around 90.60. While the current price levels can act as a roadblock, the dollar index might appreciate from here considering the momentum. The resistance levels can be spotted at 91 and 91.20 – its 21-day moving average on the upside.

Trade strategy

The rupee managed to close above the crucial support band of 73.40 and 73.50 yesterday, and even today, it continues to remain above these price levels so far. However, the dollar index indicates the potential strengthening of the dollar from here, which can weigh on the Indian currency. Considering these factors, traders can short INR with stop-loss at 73.35 if it breaks below the support of 73.50.

Supports: 73.50 and 73.65

Resistances: 73.25 and 73.15

Published on January 12, 2021

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