»Fast Profits Daily by Equitymaster

On This Day - 10 MAY 2022
Rupee@80 Soon?

Brijesh Bhatia, Research analyst

The Indian rupee is falling. It has breached the 77 mark to the US dollar.

The US dollar has been getting stronger over the last few months and that has had a big impact on currencies of emerging markets including India.

But will the USDINR fall to 80?

Find out in this video.

Hello viewers. Welcome to the Fast Profits Daily. Myself Brijesh Bhatia.

If you look at the dollar index, it has been trading at around 20-years high and 100-103.5 convincing move into the dollar index indicates that the dollar is very, very strong against the global forex currencies.

Well, it is getting stronger and stronger day by day against the INR as well. Now, if you look at the Indian rupee, it is above 77 against a dollar. So it is at the lowest level now.

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This is an update to the video which I have released on third of March 2021, when USDINR was trading at around 73 Look at this chart.

 

The 3rd of March price when USDINR was trading at around 73, I indicated that rupee is going to the lowest level of around 80. At that point of time they're very technical structures which were indicating that rupee is going to depreciate by a big margin against the dollar.

Slow and steady we are moving towards there. Now at around the 77 break out this week, can it fast and furiously rally towards 80?

Let's look at the charts over here. What are they indicating? Let's start with the breakout first.

 

Now, if you look at this consolidation, this is 113 weeks of consolidation. So why I am emphasising on 113 is because 113 is a Fibonacci number and 113 place a key important role. When the breakout happens on a Fibonacci consolidation break out, tend to give fast and furious rally and the break outs are very, very convincing.

Now, if I look at these 113 weeks which is equal to 26 months as well, again, 27 plays an important Fibonacci number. So coinciding with 113 weeks, it's around 27 months. Plus or minus one or two here and there is fine.

This indicates that this break out can be very, very crucial and we might see 80 soon coming into the rupee against the dollar, which could hit the new lows in the coming weeks, coming months. Now, this breakout is very, very important because look at the two things over here.

First look at the highs, which was in March-April 2020. Similar highs were done in the start of 2022 and now, the breakout is very, very convincing. Now, if you look at the move, the week started with open and low equal to same which indicates the momentum is very, very strong into the dollar against the rupee.

If the dollar continues to strengthen against rupee, we might see 80 soon, probably more than 80 as well. But at current point of time, I am looking at 80, which will be very, very crucial because just look at a previous move, which was somewhere around 77 to around 75. If I just take 224-261%, it comes to around 80.3-80.4. So I am looking at 80 as a crucial juncture.

 

Now if I just look at the chart over here. The orange line is 100 weekly moving average. Now if we look at it historically, right from around 10-15 years back as well, rupee has been depreciating slow and steady against the dollar.

This is no surprise to the viewers, but most importantly, if you look at the 100 weekly exponential moving average, every time it tests it, consolidates and then rallies.

Similarly, if you look at the lower line where the demand zone has been being highlighted on to the charts, look at the 100 weekly exponential moving average, the orange line. The support was taken and then the momentum started on the bullish trend.

So 100 weekly exponential moving average plays a key important role. That is a good risk reward trade. Looking at going long on to the USDINR and if you are a hedger, always look at these levels in future as well, which will help you to hedge the quantity or proportionate of the percentage of your order value, which is also very, very important.

So in the future also keep a watch on 100 weekly exponential moving average on the USDINR. This plays a key important role.

On the lower panel, if you look at it, the MACD is moving positive. Now if you look at the both the averages, the bullish average, the blue line, it is getting stronger day by day and again if you look at the histogram, this week and last week, we have seen an uptick on the histogram. So again it indicates the momentum is very, very strong for the dollar and depreciation for the Indian rupee is on the cards.

So I am expecting 80, this is in follow up video as I said, I am expecting 80 to come soon in the USDINR and rupee is likely to depreciate more towards the 80 levels.

Signing off, Brijesh Bhatia.

Warm regards,

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

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