USD/INR Analysis
Morning Update: Will the USD/INR pair continue to rise or fall from its current trading level of 83.20 ?
The USD/INR has been dropping in recent days, breaking below the resistance zone of 83.50 that we previously highlighted in our study. For the past few weeks, the USD/INR exchange rate has fluctuated between 83.00 and 83.50, but last friday it finally fell below the 83.00 zone in spot and closed below it. Using the USD/INR chart and the January monthly options data, we can determine whether the trend will continue to drop or rise:
- For the previous few weeks, the USD/INR has moved sideways, trading between 83.00 and 83.50. Last friday it broke through and closed below that level.
- The chart shows a strong support zone of 82.70-82.80, and there may be major demand for USD/INR near the 200 DMA, which is located in the 82.70 region.
- The January monthly option chain for USD/INR also shows heavy put writing near the 83.00 strike, indicating a likely sharp climb in the USD/INR pair to the 83.50 level.
Please carefully analyze the preceding chart to better understand the USD/INR pricing movement. For weeks, the USD/INR exchange rate has been floating sideways between the 83.00-83.50 range. Last Friday, it broke down and closed below this level. The fact that the USD/INR broke through the 83.00 level last week and closed below it after October suggests that the pair is ending its protracted distribution period. However, the 200 DMA, which is placed around 82.70, indicated strong demand, and buyers pushed the price above the 82.70-82.80 zone, as suggested by the USD/INR January monthly option chain.
Let's now examine and comprehend the USD/INR January monthly options chain:
The option chain represented in the above table shows heavy put writing at 83 strikes, and even though the price has fallen below the 83.00 zone in the spot market, the writers have not given up, indicating that buyers drove the price over the 83.00 level. The option chain suggests that the USD/INR may resume its strong rising trend and return to the 83.50 spot zone.
The Dollar-Rupee pair (USD/INR) has been consolidating for a number of months within the area of 83.00 to 83.50, as indicated by the chart and option chain above. It appears that this consolidation will continue. The Reserve Bank of India's (RBI) actions have kept the USD/INR exchange rate comparatively constant in spite of the dollar index's high volatility.
The USD/INR is expected to strengthen further, possibly moving between 82.80 and 83.50. This suggests a 70-paisa range in which the USD/INR could move over the next few weeks before developing a new range. As of now, the decline looks excellent for buying USD/INR because the 82.70-82.80 area is a decent support zone. Traders can seek for buying chances in the USD/INR pair. Traders use the risk/reward ratio to manage their capital and risk of loss. The ratio is useful for calculating the risk and expected return of a given trade. In general, larger risk means higher expected returns. Anything above 1:2 suggests an appropriate risk-reward ratio.
Look at the levels of support and resistance on the USD/INR daily chart. Every level is displayed on the spot chart:
|
USD/INR |
Support |
Resistance |
|
Level 1 |
82.70 |
83.40 |
|
Level 2 |
82.50 |
83.50 |