Technical Analysis

Rupee will witness downward pressure

Akhil Nallamuthu, BL Research Bureau | Updated on November 13, 2019

The rupee seemed to face continued selling pressure and lost 0.25 per cent against the dollar on Monday. It ended the session at 71.46 versus the previous close of 71.28. Thus, it has taken down the key support at 71.4, indicating chances for further depreciation.

The dollar index is trading with low volatility and for the past three trading sessions, it is oscillating in a tight range between 98 and 98.25. Continuing with the bullish trend in dollar, if it breaks out of 98.25, it will most likely appreciate to 98.5. So long as it trades above 98, the outlook is positive for the dollar.

Other than dollar demand, the factor that is weighing on the domestic currency is a weaker than expected Index of Industrial Production (IIP) data. The industrial production has contracted 4.3 per cent in September 2019 compared to an expansion of 4.5 per cent in the same month previous year. There is a contraction sequentially too, as it contracted by 1.1 per cent for the month of August this year.

The rupee has opened significantly lower in today’s session at 71.77 compared to Monday’s close of 71.46. Currently it has even slipped below the support at 71.6, meaning the domestic currency might witness further downward pressure. Hence, traders can take a bearish view and short rupee on intraday rallies with 71.4 as stop-loss.

Supports: 72 and 72.3

Resistances: 71.2 and 71.4

Published on November 13, 2019

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