USD/INR – Weekly Outlook & Analysis for 9th December 2020
USD/INR Forecast & Technical Analysis for Forex
Introduction
The USDINR shows a slowing in bearish momentum on platforms at Olymp Trade despite an upward trend on the NIFTY50 Index. Should we expect a slump in the exchange rate in favor of the Indian Rupee? Let’s follow a top down time frame analysis on the USDINR charts.
India’s Fundamentals
India M3 Money Supply
It is a measure of the money (banknotes and coins) circulating in India’s economy to purchase goods and services. M3 also includes market deposits, certificate of deposit, and current/savings account, etc.
A higher released M3 reading compared to the previous, is considered positive for the Indian Rupee.
The last reading was on December 02, 2020, where the actual came out 12.5%, which was greater than the previous at 12.0%. This week’s reading will be coming up on December 10, 2020.
US Fundamentals
The US and China tensions are back in the headlines after traders and investors on different online broker platforms looked into the coronavirus pandemic and US elections.
A recent Reuters report considers US imposing sanctions on China officials over their part in certain events taking place in Hong Kong.
This week, the US Jobless Claims 4 weekly average will be released on December 10. The week to week figures is expected to be volatile. However, the four weeks Average has been revised upward in the face of a down-trending actual figure.
USDINR Technical Analysis
Monthly Chart Projection: Bullish Correcting
Monthly Resistance Levels: 74.653, 76.330
Monthly Support Levels: 69.970, 68.123, 64.126, 63.160
So far, so good, the regular bearish divergence on May 01, 2020, persists. On the flip side, the USDINR exchange rate now trading within MA10 and MA20 show that we may be coming to an end of the bullish trend correction.
The pair from the monthly MN time view shows a strong bullish outlook that favors the Greenback, and clues towards that are already revealed by a price close above the MA10 on October 01, 2020.
Weekly Chart
Weekly Resistance Levels: 74.612, 75.496, 76.822
Weekly Support Levels: 70.346, 71.744, 72.658
Coming one step down to the weekly chart, we observe a successive higher peak above the September 21, 2020 height, which supports the monthly chart view of a likely bottoming of the correction phase.
Though the Indian Rupee shows strength in the bearish-Acc candlestick formation after last week’s close, a breach of the 74.168 resistance will confirm a bullish swing.
Daily Projections: Bearish-consolidating
Daily Resistance Levels: 75.358, 75.028
Daily Support Levels: 71.472, 72.658
A double top chart formation is set as the USDINR exchange rate hit the 75.028 resistance set on August 20, ’20.
The trend is bearish for now, considering the dead cross of the MA10 and MA20, and price-setting a high within both Moving Average range.
4HR Chart- Range Bound
4Hour Resistance Levels: 74.340, 74.038, 73.788, 73.512
4Hour Support Levels: 73.002, 72.658
The H4 time frame’s bearish trend is somewhat choppy as the price cross above both MA10 and MA20 on November 29 and December 01.
We may be entering a range-bound market on the H4 time frame, where a breakout could affect either direction.
Bullish Scenario:
A second price break to the upside of the MA10 (Monthly-TF) will serve as a signal to take a long position on the USDINR, betting on a stronger Greenback.
Bearish Scenario:
The bears stay solid at press time following the weekly chart view. A death cross of the stochastic oscillators’ %K and %D shows possibilities of a price slump to the 71.00 round-number support.
Conclusion and Projection
We hold a positive Bias towards the Greenback in the longterm despite a bullish Nifty50 index and a bearish divergence on the USDINR. However, short term intraday swings are still possible in the coming weeks.
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