The USD/INR continues to test resistance levels and then produce slight reversals lower as risk adverse sentiment rules the landscape.
The USD/INR tested higher resistance targets on Monday above 74.0000 and then produced a reversal lower which promptly tested support levels around the 73.6300 mark. Forex has taken on a cautious approach globally as investor sentiment grows fragile leading up to the US election. Technical charts show the tight range within the USD/INR has actually widened and opened the door to the possibility volatility is getting ready to emerge. This is not a farfetched notion considering there are only five trading days left until the US election gets underway.
A wider range means speculators should broaden their trading windows and choose their stop losses with an ample amount of value in order to let their positions work. However it also means that traders with less cash in their accounts need to use smaller amounts of leverage when speculating, because selecting stop losses with larger differentials regarding price action means more money can be lost if trades go the wrong direction.
In early trading this morning the USD/INR has seemingly produced short term support which has halted lower price momentum. The decision speculators need to make is if the current round of bullish behavior in the USD/INR is a reflection of only risk adverse sentiment building within global forex, or if it is a sign that there is a change developing which will hold mid-term.
It is unlikely the USD/INR is going to sustain trading above the 74.0000 level for a long duration, but the forex pair has certainly proven it has the ability to test higher resistance and bullish momentum can be strong. Support levels have also increased and seen incremental rises since the bullish trend began to develop on the 12th of October, this after the USD/INR hit a low of 72.8700. Short term speculators may suspect that support levels around the 73.5600 to 73.4000 marks will prove adequate and produce reversals higher if risk adverse trading continues to be displayed.
Traders who pursue speculative short term positions may want to buy the USD/INR with limit orders and pursue resistance levels above with take profits. It is likely the next few days of trading will produce choppy results as investors try to find equilibrium before the US election and this will potentially generate more bullish price action within the USD/INR.
Indian Rupee Short Term Outlook:
Current Resistance: 73.8100
Current Support: 73.5600
High Target: 74.0500
Low Target: 73.4000