USDINR-Weekly Outlook-Venkat's Blog

Past week saw continued buying interest and the pair hit the high of 82.93 and closed at 82.85. The buying interest continues as the market fears breach of 83 which might have catastrophic effect. It is evident from the market action that the declines are used as opportunity to hedge the Imports. Markets are confused on the logic of this magic numbers 81.70 & 83.00. This time around the pair is at a crucial juncture and the weekly charts show signs of potential breach on the upside if the pair stays above 82.05 on closing basis which may trigger a spike towards 83.30 and beyond. Expect the range of 82.55-83.30 to hold for the week and there could be choppy moves within this range. A close outside this range requires re-assessment of risk/direction and target.

A few more observations:
As noted in the previous blog, continue to keep the following input for quick reference.

• Market is expecting 81.70-83.10 will be protected. If appears that the same kind of yo-yo moves may continue till one more quarter if we do not see a close below 81.70
  
• The 82.75-83.25(with error adjustments) zone is the Fib projection of July 2011 to July 2013. Alternatively, the Fib projection of the move from Jan 22(Low) to Oct 22(High) and Nov 22 low also suggest the projection as 82.92. Hence, the importance. If breached, we may see another spike towards 85.70.
  
• Neither the moves in Dollar Index-DXY nor the equity have direct correlation
  
• A decisive week ahead. We are close to the Top of the Triangle/Rectangle and the Oscillators in the weekly charts show indications of higher levels
  
• The narrowing of the Bollinger Bands suggest we can expect sharp moves sooner. 85+ or 80- is a strange puzzle.
  

Disclaimer: The views expressed here are personal and not connected to SYFX Treasury Foundation. The views are for learning and reference purpose only.