Technical Analysis

Short INR below 75

Akhil Nallamuthu, BL Research Bureau | Updated on July 08, 2020 Published on July 08, 2020

The rupee (INR), which weakened yesterday, has begun today’s session marginally higher at 74.86 versus yesterday’s close of 74.93 against the dollar (USD). But then it has declined since then and is now trading near the important support level of 75, a break below which can result in a sharp fall.

Below 75, the support levels would be 75.15 and 75.4. But if the domestic currency appreciates by taking support at 75, it could face a hurdle at 74.8. A rally above this level can take the INR to 74.6.

Foreign portfolio investors (FPI) are once again showing interest in domestic assets. After registering a net inflow of nearly ₹350 crore (equity and debt combined) on Monday, yesterday’s number stood at ₹830 crore. If the FPIs continue to invest in the same manner, the inflow could help the rupee to stay afloat.

Dollar index

The dollar index recovered slightly yesterday; however, it remains below the support levels of 97 and the 21-day moving average, retaining the negative short-term outlook. As long as the index stays below 97, the chances of recovery are slim and that is good for the Indian currency.

Trade strategy

Though the rupee has declined a little so far, it has a substantial support at 75. As long as it remains above that level, a recovery cannot be ruled. Hence, traders can short the rupee with tight stop-loss if it breaks below the support of 75.

Supports: 75 and 75.15

Resistances: 74.8 and 74.6

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Published on July 08, 2020
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