India Markets

The Rupee

Brandon Wendell
Instructor, CMT

I have been receiving several emails from traders who are concerned about the value of the Rupee (INR) falling so much against the US Dollar (USD). As a trader, the profits you make in the equity or futures markets can be diminished dramatically by a large decrease in the value of your currency. Simply put, even if you earn more, you can buy less.

So I decided to take a look at the charts of the Rupee versus the dollar to see if they would tell me anything about where the markets are headed.  On the bigger time frame of a weekly chart, the USD has enjoyed quite a gain.

rupee weekly

The large green candle after the breakout of the June 2012 highs usually signals novice traders jumping in late and trying to buy the breakout.  As you can see from the red candles that followed, price is shaking them off before it may continue higher.

The question is how far the correction in the USD may last before the impulses upward will continue.  Looking to the daily chart of the USD/INR pair, we have reached a demand zone at 58.90.  It does not look like that level is likely to hold since we did not come into it quickly as our odds enhancers would require.

rupee daily

The level at 57.46 – 58.40 holds more promise as a stronger level.  It is a bit wide, but there was good price movement away from the zone and if price returns quickly, you should expect a decent bounce from there.

Other major currencies such as the Euro and the British Pound are confirming the continued weakness of the Rupee.  The weekly charts are showing continuation patterns.

rupee poundrupee euro

So learn how to hedge your gains in the markets by using Forex.  You will protect your purchasing power against these wild fluctuations.

This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.