In early trading this morning the USD/INR remains locked within a tight range. The past five days have produced a consolidated value band, but it has also seen a sudden burst higher which tested resistance and then reversed back to its known short term junctures. 74.6000 to 75.0000 have provided most of the trading range the past five days, but the important resistance target of 75.2000 did see a spike towards it value and proved strong.
While the past five days has produced this tight range, it will intrigue speculative traders that resistance levels do seem to be incrementally lowering. Support levels have remained staunch and traders have certainly experienced a sideways range, but if a direction needs to be chosen for the next potential breakout it might be a selling position of the USD/INR that is decided upon.
Support near the 74.6000 proved adequate late yesterday, but this price level may be a reasonable area for speculators to believe a test of sentiment is developing. After testing the 74.5000 level late in July, the USD/INR has seen a choppy bullish trend emerge. However, speculators may suspect this buying cannot be sustained under present market conditions. Risk appetite in global markets remains optimistic and a look at a one month chart provides evidence that a bearish trend could reemerge for the USD/INR.
Within its current price vicinity of 74.7000 to 74.8000 selling positions with limit, orders may prove worthwhile. Adequate stop-loss orders need to be implemented, but looking for a downward direction from the USD/INR appears to be a logical choice under the present market conditions. Traders may need patience if the current range of the forex pair continues to consolidate, but if the trader is not greedy and puts a take profit order near the 74.6000 to 74.6500 junctures while using carefully chosen leverage, this trade may prove a rather comfortable speculative position.
Since the middle of June, the USD/INR has shown the ability to create a bearish trend. Risk appetite globally remains optimistic and although India faces economic challenges due to coronavirus, the transparency the government has provided adds a certain comfort level for traders who want to know technically and fundamentally that complex factors are being considered as they trade.
Indian Rupee Short Term Outlook:
Current Resistance: 74.9000
Current Support: 74.6000
High Target: 75.1500
Low Target: 74.5000
