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Test of Short-Term Lows Approaches Inflection Point

The USD/INR has continued to show signs of bearish movement, but has seen reversals higher when important support levels have been tested.


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In early trading this morning, the USD/INR touched a low of nearly 74.0500. However, yesterday’s trading produced a low of approximately 73.8600 which tested values also seen on the 8th of November. These depths were the lows for the past month of trading, and prior to yesterday the prices had not been seen since the last week of September.

Having hit a high of nearly 75.6500 on the 12th of October, the USD/INR has seen an incremental bearish trend develop with its typical amount of volatility. This morning’s trading has continued to see a slightly higher reversal develop and resistance around the 74.2800 could prove to be important if it is able to be durable. If it is toppled and the USD/INR continues to traverse higher, bullish traders may believe the 74.3800 ratio could be challenged.

Having achieved a good amount of downward momentum the past month, the USD/INR is trading in the middle of its three-month range. Intriguingly, the ability of the USD/INR to bounce off important lows produced the last two days indicates that the 73.8500 to 73.8000 junctures remain an important inflection point. Until these levels are penetrated lower, the USD/INR may find choppy trading conditions persist, particularly if current resistance levels prove adequate too.

Traders of USD/INR need to take into account that price velocity is often quick and risk-taking tactics need to include solid risk management to guard against the potential of spikes. As the Forex pair traverses its current range, financial houses are likely looking for equilibrium and speculators need to be prepared for potential moves which technically challenge existing short-term perceptions quickly.

Cautious traders who believe the USD/INR has more bearish territory it can capture may choose to be sellers on slight moves higher that come within sight of current resistance. More aggressive traders may look at moves below the 74.2000 ratio as a signal additional selling momentum is going to build.

For traders who are skeptical of the downward trajectory of the USD/INR, a reminder that the one-month bearish trend has been rather strong should be acknowledged. However, if a speculator wants to wager that upside reversals will continue to boil on occasion, buying the USD/INR near current support levels and looking for fast trades, which march towards resistance levels while using take profit orders could prove to be worthwhile.

Indian Rupee Short-Term Outlook

Current Resistance: 74.2800

Current Support: 74.1600

High Target: 74.3900

Low Target: 73.9500


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