The Indian Rupee vs. USD ( USDINR ) listed on Binomo broker sites has been in a side-ways market structure for five months in a row as both pair struggle for control over the direction of the exchange rate.

Although the range-bound market setup seems to favor the Greenback, the Indian Rupee is not going out without a fight.

Let’s move on to analyze the significant chart patterns that keep the pair in the current structure and possibilities of a breakout in either the bullish or bearish direction while touching on some macroeconomic indicators that may also hint at recent events.

India’s Fundamentals

India Interest Rate Decision

Within any country’s monetary policy, policy rates are the most important as any changes in them affect inflation, economic growth, unemployment, and exchange rate.

The monetary policies are actions taken by a country’s government or apex financial institution or governing body to achieve some national financial goals. The policy rate is based on the correlation between interest rates at which money can be borrowed and the cumulative supply of money.

Any data reading that is lower than expected is rated bearish for the currency while a higher than expected reading is considered as positive.

From the most recent data released on December 5, a bearish outlook can be supposed for the INR. The data shows that the actual reading is 5.15%, the previous reading 5.15%, and the forecast figure is 4.90%.

U.S. Nonfarm Payrolls

The Nonfarm Payrolls index is an evaluation of the difference in the number of people employed during the previous month. This evaluation excludes the farming industry.

Any data reading that is lower than expected is rated bearish for the currency while a higher than expected reading is considered as positive.

From the most recent data released on January 10, a bearish outlook can be supposed for the USD. The data shows that the actual reading is 145K, the previous reading 256K, and the forecast figure is 164K.

USDINR Technical Analysis

USD to Indian Rupee: Long term Projection: Consolidating after a Bullish Thrust

Monthly Chart

After setting an all-time high at 74.528, the Indian Rupee saw an increase in demand, leading to a price plunge of about (-8.59%), before signaling a pin-bar price pattern on 01 Jul ’19.

The USD quickly came out of the correction phase, which was confirmed by a golden cross of the stochastic oscillator and slowly headed for the oversold level.

A price close above the 71.754 resistance would confirm a bullish takeover and set new highs beyond the all-time high.

Weekly Chart

The USDINR came out of the oversold area and entered a range-bound market structure after setting a bearish resistance on 02 Sep ’19.

Furthermore, the bulls and bears set up resistance and support levels at 72.066 and 70.194, respectively, keeping the USD to INR price within a tight horizontal range.

A breakout above or below either of these levels would confirm a mid-term trend. However, we favor a breakout to the upside, as the pair trades above the MA-200.

USDINR Medium Term Overview: Bullish Overbought

Daily Chart

The Daily time frame shows the USDINR coming out of the overbought area, first on 08 Jan ’20, and recently after a breakdown of the 31 Jan ’20 support (71.312).

It may appear as though the bears are currently in control of the market; however, the pairs still maintains a bullish outlook, considering that it trades above the MA-200. So we would suggest taking short sell positions with caution.

4HR Chart

Taking swing trade setups on the 4hour chart has been highly rewarding, as the pair flagged bullish and bearish divergence setups on 29 Jan ’20 10:00 and 30 Jan ’20 10:00.

The pair trades in the oversold area, and below the MA-200, leaving lower highs in its path.

Conclusion and Projection

The USDINR is mean reverting, offering traders the opportunity to trade back into the mean price level, by placing buy and sell limit orders at the extreme support and resistance levels.

A risk-averse mindset is suggested until the exchange rate breaks beyond the resistance and support levels.

USDINR – Weekly Outlook & Analysis for February 7 2019

USDINR Forecast & Technical Analysis

Introduction