The charts of the USD/INR pair are now showing signs that traders should buy the greenback in the range of 62 to 62.5 and trade for a target of 66 or higher levels.
The market saw a see-saw movement on Thursday and Friday. First, Chairman Bernanke was kind enough to prop up sentiment on Dalal Street. The "no taper" effect was seen and the market cruised past 6100 on the Nifty.
In our last weekly article we had mentioned about this possibility and also that this price move would most likely be the last of the joy rides for the bulls.
On Friday, expectations were high and Dr. Rajan was expected to play along. In his own ways, he told the market that the picture is not as rosy at it seems to be.
Let us beware that the averages hide more than what they reveal. While the Nifty may be at a shouting distance of a new all-time high, the situation on the ground is far worse.
His focus on inflation and currency management strategies may have disappointed the street, but they sure seem to be steps in the right direction. Kudos to the RBI Governor!!
Technically speaking, we are sensing a reversal of the bullish trend seen over the last four weeks.
The Nifty has rallied in excess of 1000 points in just a matter of 20 days and definitely warrants a correction.
However, the confirmation that a time and price reversal has taken place is still not here. If the Nifty were to fall below the 5870 mark (Nifty spot level) before Monday noon, all positional bets should be squared off and short positions should be initiated.
In case this does not happen and the market continues to move sideways, a fall in excess of 265 Nifty points in less than seven trading hours would confirm that the downtrend has begun.
We expect the month of October to be significantly difficult for the bulls as the market may head towards 5650/5600 levels. Traders are advised to take positional shorts only after the time and price reversal is confirmed.
If such a reversal does not take place, the market is likely to move sideways within the range of 6100 to 5900 levels.
The charts of the Dow and the S&P present an interesting scenario. On the weekly chart, both indices show strong negative divergence on the RSI momentum oscillator.
Considering the overall price pattern and wave structure, we expect a 5% to 8% correction in these indices in the coming 3 weeks. This is also likely to have an impact on Indian equities.
The charts of the USD/INR pair are now showing signs that traders should buy the greenback.
Technical evidences such as a deeply oversold momentum oscillator and favorable price pattern structure suggest that the rupee should depreciate towards 66/67 over the next 3-5 weeks.
We are of the view that traders can buy the dollar in the range of 62 to 62.5, place a stop loss at 59.9 and trade for a target of 66 or higher levels.
All in all, the technical evidences in the charts of currencies, 10 year bonds and Indian equity indices suggest tougher times going ahead.
Traders are advised to change their view accordingly and trade in the direction of momentum. To fight the market to seek profits is never a prudent way to make money.
In our last weekly article we had mentioned about this possibility and also that this price move would most likely be the last of the joy rides for the bulls.
On Friday, expectations were high and Dr. Rajan was expected to play along. In his own ways, he told the market that the picture is not as rosy at it seems to be.
Let us beware that the averages hide more than what they reveal. While the Nifty may be at a shouting distance of a new all-time high, the situation on the ground is far worse.
His focus on inflation and currency management strategies may have disappointed the street, but they sure seem to be steps in the right direction. Kudos to the RBI Governor!!
Technically speaking, we are sensing a reversal of the bullish trend seen over the last four weeks.
The Nifty has rallied in excess of 1000 points in just a matter of 20 days and definitely warrants a correction.
However, the confirmation that a time and price reversal has taken place is still not here. If the Nifty were to fall below the 5870 mark (Nifty spot level) before Monday noon, all positional bets should be squared off and short positions should be initiated.
In case this does not happen and the market continues to move sideways, a fall in excess of 265 Nifty points in less than seven trading hours would confirm that the downtrend has begun.
We expect the month of October to be significantly difficult for the bulls as the market may head towards 5650/5600 levels. Traders are advised to take positional shorts only after the time and price reversal is confirmed.
If such a reversal does not take place, the market is likely to move sideways within the range of 6100 to 5900 levels.
The charts of the Dow and the S&P present an interesting scenario. On the weekly chart, both indices show strong negative divergence on the RSI momentum oscillator.
Considering the overall price pattern and wave structure, we expect a 5% to 8% correction in these indices in the coming 3 weeks. This is also likely to have an impact on Indian equities.
The charts of the USD/INR pair are now showing signs that traders should buy the greenback.
Technical evidences such as a deeply oversold momentum oscillator and favorable price pattern structure suggest that the rupee should depreciate towards 66/67 over the next 3-5 weeks.
We are of the view that traders can buy the dollar in the range of 62 to 62.5, place a stop loss at 59.9 and trade for a target of 66 or higher levels.
All in all, the technical evidences in the charts of currencies, 10 year bonds and Indian equity indices suggest tougher times going ahead.
Traders are advised to change their view accordingly and trade in the direction of momentum. To fight the market to seek profits is never a prudent way to make money.
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