We did close at the top of the candlestick on Monday, which is a very bullish sign and typically means that the market will continue to go in that direction given enough time.
The US dollar initially tried to rally on Tuesday against the Indian rupee but found enough resistance to turn things around and close towards the ₹75 handle. This is an area that previously has been resistive, and one that will attract a certain amount of attention due to the psychology attached to the big figure. I also find it interesting that we have ended up forming a bit of a shooting star, and if we break down below that shooting star, it would technically be a signal to start selling.
Obviously, that would be very negative for the US dollar, and it does make sense that this pair might be closely followed due to the fact that India is such an important emerging market. The US dollar itself has been strengthening against most currencies as of late, although Tuesday was a bit ugly for the greenback across the board. The candlestick from the Monday session was rather strong though, as we pierced the ₹75 level and tried to continue going higher. We did close at the top of the candlestick on Monday, which is a very bullish sign and typically means that the market will continue to go in that direction given enough time. It is because of this that I suspect we may get a little bit of a pullback that gets bought into.
As things stand right now, it looks as if there is a significant amount of support near the ₹74.10 level, based upon what we have seen over the last several days. The 50-day EMA is starting to reach towards the ₹74 level, which ties together quite nicely with the most recent price action. In other words, it looks like the downside is somewhat limited. However, if we were to turn around and break above the top of the candlestick from the Tuesday session, that more than likely would open up a move towards the ₹75 level, which has been massive resistance in the past. As far as selling is concerned, I do not really have any interest in doing so until we clear the ₹74 level, something that we will not be doing in the next 24 hours as this pair typically does not move that quickly.