Monday, May 26, 2014

USDINR near strong reversal as per channeling technique!

Bottom Line: USDINR trading at crucial levels with 58 as crucial level on downside. Move above 60 will confirm reversal!

USDINR Weekly chart spot:

            USDINR 30 mins chart spot:

Wave Analysis:

For USDINR, in the last update we mentioned that, current down move can continue towards 58 level where black channel support is placed. Break below this level will infuse selling pressure. On upside 58.60 followed by 58.90 will act as a important hurdle for USDINR”

USDINR has arrived at crucial support zone of 58 which is the important channel support along with 61.8% retracement of the entire up move from 51.20 levels to the highs of near 69. This level of 51.20 was seen in October 2012 and this pair touched 69 in August 2013. Indian currency along with many Asian currencies was looked upon as near crisis similar to that seen in 1997. However, many were surprised on dramatic reversal from 69 but from Elliott wave perspective the high was exactly near 161.8% of previous move which confirmed completion of wave 3 of primary degree and wave iv is ongoing since many months now. USDINR has also arrived near very important channel support which is valid since 2012 onwards and can be clearly seen from the above weekly chart. As of now prices have not confirmed the reversal & 58 is the crucial level and should not be ignored. In case Rupee continues to appreciate and moves further towards 57 levels than we will revisit the counts but for now it is time to be alert.

As shown on weekly chart, in Friday’s trading session this currency pair was unable to take out previous day’s low and touched intraday high at 58.55 level.The reading on RSI is exactly near 30. This is the time when one should get cautious in case major reversal across asset class happens.

As shown on 60 mins chart, prices have been getting resistance of blue channel which was earlier acting as support. This is as per polarity rule of technical analysis. Now,on upside 58.60 followed by 58.90 will act as an important resistance.As per wave perspective, prices have been moving lower in minor wave c of intermediate wave y which has arrived at matured stage as RSI exhibits positive divergence. But, as long as we do not get price confirmation trend remains on downside.

In short, for USDINR our view is cautious, where price action near 58 will be crucial. On upside move above 60 will confirm medium term reversal. Over short term 58 – 57.90 should act as important support!

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