Technical Analysis

Daily Rupee call: Tread with caution before taking fresh positions

Akhil Nallamuthu | Updated on November 20, 2019

BL Research Bureau

The rupee (INR) gained against the dollar (USD) on Tuesday as it closed at 71.71 versus the previous close of 71.84. Until the domestic currency stays above 72, it can be approached with a bullish bias as that level is solid support. But on the upside, the gains can be limited by the resistance at 71.6. Thus, the rupee can be expected to stay within 72 and 71.6 for a while.

The one-year Non-Deliverable Forward (NDF) points of the USDINR currency pair moderated to 315 yesterday after peaking at 331. This means that the spread of the forward has dropped for USDINR pair indicating lesser demand for the dollar, a favourable condition for the Indian currency. However, the rupee remains the weakest Asian currency for the month.

The dollar index, at 97.8, looks to have inched up from the support at 97.67. The 50-day moving average coincides at 97.67, making the support stronger. A renewed demand for dollar on the back of support could take the index to 98, and that could weigh on the rupee. On the other hand, if the dollar weakens, the index might decline to 97.4.

The rupee opened at 71.85 on Wednesday and is currently trading at 71.78, and this price level seems to be at the middle of the range between 71.6 and 72. So, traders need to be cautious and wait for the rupee to head to either of those levels before initiating new positions.

From here, if the rupee moves to 72, initiate rupee long position with a tight stop-loss; whereas if the rupee moves to 71.6, initiate rupee short position.

Supports: 72 and 72.3

Resistances: 71.4 and 71.6

Published on November 20, 2019

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