The upwards trend in the USD/INR continues to incrementally gain and critical resistance is being approached. The USD/INR, as of this writing, is within sight of the 74.4000 juncture. The last time the Indian rupee traversed these heights was during the last week of April. If the USD/INR is able to puncture its current resistance and soar into the higher price range which was established in April when the implications of a ‘new’ wave of coronavirus in India escalated, this will create a dynamic trading environment.
While it may appear for many traders that the USD/INR has been overbought, standing in front of the current trend could come at a great expense if risk management is not used correctly. Traders who continue to believe that the bearish trajectory of the USD/INR will be re-established sooner rather than later, may want to remain on the sidelines until a genuine wave downwards emerges which breaks through technical support levels.
Yes, if the USD/INR is able to produce a significant amount of resistance near its current price vicinity of 74.3660 and not traverse much higher, it could be an indication that a shift in momentum may be underway. However, since the end of May, the USD/INR has established the capability of incrementally increasing support levels, which is a technical indicator that the wave of buying may not have run out of power quite yet.
If resistance near the 74.4200 begins to prove vulnerable, bullish traders could begin to target the 74.4800 to 74.5000 levels. If that technical resistance price range is flirted with, traders should expect volatile conditions, because the USD/INR would then be fully testing the higher realms of its April price range which did achieve a high above 75.5000 on the 21st of April. Having highlighted the highest price attained during the frantic buying in April, it appears to be unlikely these loftier levels will be tested.
Traders with a bearish perspective may be proven correct eventually, but they are urged to be conservative with their approach in the short term. If a speculator wants to sell the USD/INR they should use a cautious amount of leverage and not try to capture too much value as they pursue downward reversals.
Indian Rupee Short-Term Outlook:
Current Resistance: 74.4200
Current Support: 74.2200
High Target: 74.7000
Low Target: 74.0500
