- The trading session on Thursday have seen a bit of US dollar strength against the Indian rupee, as we briefly broke above the crucial ₹88.50 level.
- This area has been a bit of a ceiling as of late, so it is an interesting area to pay close attention to.
- With that in mind, it’s also worth noting that the pair seems to be forming a bit of a “rising wedge”, as well as sideways consolidation all at the same time.
- In other words, it is obvious that a lot of pressure is building up in this pair, and it’s likely to see fairly significant moves somewhat soon.
Technical Analysis
The technical analysis for this pair is obviously very bullish, but we also have a lot to deal with in the form of the ₹88.50 level. The market has been rallying for quite some time, and as of late we have seen a little bit more chop, but while everybody else is selling the US dollar, traders of this currency pair may not be willing to do so as quickly, due to the fact that if there is a global slowdown coming, a lot of the emerging market economies will pay the price. Furthermore, you also have the situation where the Americans have levied heavy tariffs on India. Ultimately, there is a lot of noise.
Nonetheless, it’s worth noting that the 50 Day EMA is down at the ₹87.299 level and is rising. The ₹87 level underneath there should offer a certain amount of support as well, so all things being equal, this is a pair that even if we were to break down and fulfill the “rising wedge”, that’s probably as far as we go at the moment unless of course we get some type of massive “risk on” type of move around the world. I just don’t see that happening in this environment, and quite frankly it makes more sense that we eventually break the highs of the Thursday session and grind our way toward the ₹89 level.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
