Nifty Versus Dollar Index

Mar 24, 2021

Brijesh Bhatia, Research analyst

In our financial markets, the Nifty and the US dollar, move in opposite directions to each other.

When one is strong, the other is weak.

Recently, the Nifty has shown some signs of weakness but what is the specific levels you need to watch out for?

In other words, at what level does it make sense to change your positions from long to short.

I believe the dollar index holds a crucial piece of the puzzle.

Watch the video and let me know your thoughts.

Hello viewers. Welcome to the Fast Profits Daily video series. Myself, Brijesh Bhatia. In this video, will be discussing about Nifty versus Dollar Index.

We all know that they move in inverse directions and if you look at the price also the charts, both are moving into the opposite direction, though the quantum of the move is very much different but yes, they move into the opposite directions. So they are inversely related.

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If you look at March, Nifty has seen a slip towards 14,350 right from the high of 15,400 and on the same day we have seen back toward 14,800 levels and now in the futures we have it at 14,900 as well and do not forget, this week is the last monthly expiry of the financial year 2021. So there could be some change. Keeping those derivatives numbers aside, let's analyse what the Nifty chart versus the dollar index chart says now.


So if you look at the Nifty first, if you look at the Nifty right from the March lows and if I connect the trend line it's been taking at huge, strong, strong support now on the weekly scale, and this is a line chart, so it's physically counts the closing over here.

Now, if you look at the rising trend line, it has been connecting lows and right at around the March lows of 14,350, it took support at the rising trend line and back to the northwards journey.

Now, if you look at the dollar index on the lower side, if I just draw the support line, the previous lows, which are around the 88 levels, still, those knows are being held very, very strongly, and we have seen back towards 90-92 levels back again on the dollar index.

But still if you look for the convincing break out, it is not yet, because if I just draw the upper resistance line which is something around 95 levels, still, it has been trading at broader range between 88 and 95 for longer term. Though, once we have seen a breakout back to those ranges, still I say that I said that 88 and 95 will play out to be a bigger, bigger range.

So that's the still slightly bigger trend on the weekly scale but what could be the short term trades or could a trend change indicate?

If I just look at the weekly of Nifty first, the 14,400 highs, if you look at the line over here, the 14,400 line, or you can take the recent lows, of 14,350, the weekly close below those levels will be very decisive for me because it will not only break the previous highs and close below those, but it will also break the rising trend line, which is around 14,300 levels.

So till the markets are not breaching 14,300-14,400 on the weekly scale we think, the Nifty will continue to remain bullish.

Yes, if you remember, we have a couple of weeks back, under Momentum Moves, indicated that Nifty might have a time correction and that is what is happening at the current point of time, but overall we think that till the market doesn't close below 14,300 14,400 levels, we don't think that the trend change might happen from a longer term point of view. Even if we get the short term, yes, the horizontal trend line which I have shown, the highs are still held very, very strongly on closing basis.

At the same time, if I look at the dollar index the lower side, it's at a crucial level because the previous support will now act as a resistance. If you look at the 92.10, which is the weekly previous low, it will play a very, very crucial role.

So let's slightly keep a margin at 92.30. Any weekly close above 92.30, the bulls can be under pressure on the Nifty. So it depends what kind of trader you are. If the dollar index moves above 92.30, we think that 95 can be tested at the upper level of the resistance zone and that might put pressure on the Nifty.

So if you are an equity trader keep a watch on these levels of 92.30 on the dollar index or 14,350 or 14,300 on the Nifty. If those levels are broken, it's definitely a time for some profit booking or a trend change can happen and short traders might accelerate their positions.

At the same time, if you're a forex trader and looking for a forex trade, 92.20-92.30, weekly close on the dollar index above these levels that's a huge margin of trade, a huge rally towards 94.5-95 levels on the upper side.

So keep a watch on these levels onto the Nifty as well as the dollar index as I said, it's been inversely related, which can be clearly seen by the prices. So either of the one breaks, it could pressure on the other.

So keep a watch on these. 14,250-14,3000 on the Nifty on the weekly scale and 92.30 on the dollar index. These two levels are very much important for you to keep a watch on a for a medium term to short term trend change on the Nifty and dollar index.

So, before signing off I request everyone click on the subscribe button and do post comments, how you like our videos. Before signing off again, thanking you all and we hope that this financial year has seen huge profits for you and the coming financial year could bring bigger profits for you.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

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1 Responses to "Nifty Versus Dollar Index"

Premkumar R

Apr 12, 2021

Interesting video.

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