USD/INR Analysis
Morning Update: Will the USD/INR pair continue to rise, or will it test the 200 DMA again ?
In recent days, the USD/INR has traded sideways inside the range, breaking below our previously indicated resistance zone of 83.50. For the past few weeks, the USD/INR exchange rate has varied between 83.00 and 83.50, although it fell below 83.00 last week before rebonding again. Using the USD/INR chart and the January monthly options data, we can predict whether the trend will continue to fall or rise:
- For the previous few weeks, the USD/INR has been trading sideways between 83.00 and 83.50.
- The chart suggests a strong support zone of 82.70-82.80, and USD/INR may see major demand near the 200-day moving average, which is in the 82.70 region.
- The January monthly option chain for USD/INR also indicates significant put writing near the 83.00 strike, predicting a rapid increase in the USD/INR pair to 83.50.
Please carefully analyze the preceding chart to better comprehend the USD/INR price movement. For weeks, the USD/INR exchange rate has been between 83.00 and 83.50. Last to last week, the price fell and closed below the 83 zone. The USD/INR broke below 83.00 last week and fell below it after October, indicating that the pair is nearing the end of its protracted dispersion period. However, the 200 DMA, which is close to 82.70, showed strong demand, and buyers forced the price above the 82.70-82.80 zone, as suggested by the USD/INR January monthly option chain.
Let's now look at and understand the USD/INR January monthly options chain:
The option chain in the table above shows significant put writing at 83 strikes, and despite the fact that the price has fallen below the 83.00 level in the spot market, the writers have not given up, indicating that purchasers drove the price above the 83.00 line. The option chain indicates that the USD/INR may resume its strong upward trend and recover to the 83.50 spot zone.
The Dollar-Rupee pair (USD/INR) has been consolidating for several months in the range of 83.00 to 83.50, as seen by the chart and option chain above. It appears that the consolidation will continue. The Reserve Bank of India's (RBI) measures have kept the USD/INR exchange rate relatively stable despite the dollar index's significant volatility.
The USD/INR is likely to consolidate further, maybe between 82.80-83.50. This predicts a 70-paisa range within which the USD/INR could meander in the next weeks before creating a new range. Currently, the decrease appears to be ideal for purchasing USD/INR because the 82.70-82.80 area serves as a solid support zone. Traders can look for purchasing opportunities in the USD/INR pairing. Traders utilize the risk/reward ratio to manage their capital and potential loss. The ratio is important for determining a trade's risk and projected return. In general, greater risk leads to higher expected returns. Anything higher than 1:2 indicates an appropriate risk-reward ratio.
Consider the levels of support and resistance on the USD/INR daily chart. Each level is indicated on the spot chart.
|
USD/INR |
Support |
Resistance |
|
Level 1 |
82.70 |
83.40 |
|
Level 2 |
82.50 |
83.50 |