My previous post on INR called for a
correction to the levels of 57 and further to 55. The call was given when INR
was trading at 60.02 with a stop loss of 61.30. INR fell from that level to
58.33 and then bounced back to hit my stop loss of 61.30.
In my previous call I had made the
following assumption
1. Narendra
Modi will become the prime minister of India
2. Equity
markets will break out
3. India
will witness heavy FII inflows
4. Another
implicit assumption was BJP govt. will force RBI to allow INR to appreciate as
strong currency will give a positive signal to people.
The first three assumptions came
true while the fourth did not. The failure of INR to move beyond 58 indicates
that RBI will strongly maintain the floor for INR.
If we look at
the current structure of INR it’s forming an inverse head and shoulder structure.
Any breakout above 61.50 will see a severe depreciation and INR can move up to
63 levels and beyond.
Meanwhile DXY
has appreciated to 84 levels while Euro (1.29), GBP (1.60), JPY (106) are
plummeting as mentioned in my previous post.
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