Bearish sentiment appears to be the majority feeling within the USD/INR, but as speculators know, ‘feelings’ do not guarantee profits when placing positions. Fortunately, there also seems to be technical evidence that resistance levels have incrementally begun to lower. The past five days of trading are encouraging signalsl for traders who want to try to pursue their bearish sentiment with the USD/INR, as it attempts to recapture the Indian rupee’s lost value since the beginning of September.
As of this morning, the USD/INR has actually seen a reversal higher and is trading near the top of its one-day technical charts. However, traders can take comfort by looking at a five-day chart and seeing there are plenty of technical resistance levels rather close to the current price vicinity of 74.180. This makes the USD/INR attractive to sell using the higher levels as stop loss ratios. It also means that selling near these current high price marks may be the correct calling card.
Global risk appetite appears to remain optimistic this morning, but speculators may suspect that financial institutions will want to take a breather after creating strong gains in many international equity indices yesterday. However, the USD/INR remains attractive to pursue downside momentum because it has failed to reestablish its strong value band below, which was largely between 73.100 and 73.700 the past couple of months, with obvious periodic trading dynamics outside of that sphere as well.
If the USD/INR does try to return to its lower price band, which it largely maintained before financial markets experienced a jolt of pre-election nervousness, this would be rather intuitive. However, markets do have the ability to traverse in both directions. Speculators who want to buy the USD/INR using the logic that the USD/INR may need to challenge higher realms near the 74.300 level may have a solid argument short term.
Nevertheless, traders should ask where the greatest risk reward scenarios may create the best profits. Near term, from a technical perspective, it appears the largest amount of room to traverse for the USD/INR is downward as it attempts to re-establish its bearish trend. Support levels do look attractive. This doesn’t mean they are destined to be tested, but speculation is based on probability, and if traders use proper stop loss tools while looking for selling pressure to build momentum, they might be able to capture profitable positions.
Indian Rupee Short Term Outlook:
Current Resistance: 74.260
Current Support: 74.030
High Target: 74.380
Low Target: 73.700
