USD/INR Analysis and Path Ahead
Morning Update: Will the USD/INR pair continue to advance, or will it retest 82.50-82.70 again ?
Last Friday, USD/INR stunned everyone by rising about 60 paisas, passing the 83.50 zone and touching the 83.70 zone in the spot, while everyone was ready for USD/INR to break below the 82.50 zone. USD/INR surprised everyone by moving up from 82.70 to 83.70, nearly 100 Paisa, which is precisely what we discussed in our analysis for the past few days, and we were positive on USD/INR. Now After touching the 83.70 zone in spot, let's look at what can happen next using the USDINR daily chart and the USD/INR April monthly options chain:
In recent days, the USD/INR has been trading sideways within its range, slipping below the previously established resistance level of 83.50. The USD/INR exchange rate has fluctuated between 82.70 and 83.50 in recent weeks, falling below 83.00 last month before recovering well to 83.70.
- The USD/INR had been trading sideways between 82.70 and 83.50 for the previous three weeks until unexpectedly rising sharply last Friday.
- The chart shows a sturdy support zone of 82.50-82.70, and USD/INR may see strong demand near the 200-day moving average and the 82.50 level.
- The USD/INR monthly option chain for April indicates heavy call writing near the 83.00-83.50 strike, implying that the pair may crack to touch lower boundaries.
- The USD/INR is facing significant supply around 83.50, and Friday's up advance appears to be a bull trap, with a phony breakout that ensnared most bulls.
Please carefully review the preceding chart to better comprehend the USD/INR price movement. For weeks, the USD/INR exchange rate has been between 82.70 and 83.50. Last week, the price rose and closed above the 83.50 level. The USD/INR fell below 83.00 last month, indicating that the pair is nearing the conclusion of its long-term volatility. However, the 200 EMA, which is close to 82.70, witnessed substantial demand, and purchasers forced the price over the 82.70-82.80 range anticipated by the USD/INR april monthly option chain. USD/INR surged straight from 82.70 to 83.70.
Now, the USD/INR April monthly options chain suggests that this Friday's up advance was a bull trap, and that 83.50 remains a strong resistance zone. One can seek for short opportunities in USD/INR because the risk-reward ratio is so favorable to short USD/INR at this time.
Let's look at and analyze the April USD/INR monthly option chain.
The option chain in the table above shows a significant volume of put writing at the 82.50 and 83.00 strike levels, and despite the fact that the price fell below the 83.00 level in the spot market last month, the writers have not given up, indicating that buyers have brought the price above the 83.00 line, and USD/INR has bounced from 82.70 to 83.70 in spot.
Again, the USD/INR April monthly options chain suggests that there is strong call writing at the 83.00 and 83.50 strike, indicating that USD/INR may settle in the 82.70 to 83.70 area and then slide back to 82.70.
The Dollar-Rupee pair (USD/INR) has been consolidating for several months in the 82.70 to 83.50 region, as shown in the chart and option chain above. It appears that the consolidation will continue. Despite the dollar index's volatility, RBI policies have maintained the USD/INR exchange rate relatively constant.
The USD/INR pair is expected to stabilize further, reaching 82.50–82.70 or 83.50–83.70. The USD/INR is expected to fluctuate around the 70-100 paisa region over the next few weeks before settling into a new range. Traders may explore shorting opportunities in the USD/INR pair at this time. Traders use the risk-reward ratio to balance profits and losses. The ratio is useful for calculating a trade's risk and expected return. In general, greater risk leads to higher predicted rewards. Anything more than 1:2 is regarded as an outstanding risk-reward ratio.
Examine the levels of support and resistance on the daily USD/INR chart. Each level is displayed on the spot chart.
|
USD/INR |
Support |
Resistance |
|
Level 1 |
82.70 |
83.50 |
|
Level 2 |
82.50 |
83.70 |