USD/INR: Bears In Charge Despite Latest Bullish Test

Hourly Chart
USD/INR Hourly" title="USD/INR Hourly" src="https://d1-invdn-com.akamaized.net/content/pica076f51227cd619930d58863e2dfa9e2.PNG" height="322.63448275862" width="undefined">
After holding 61.7 resistance yesterday, USD/INR pushed lower quickly, pushing below 61.5 and the rising trendline to usher in a new bearish phase. Despite today’s rally, price continue to remain below yesterday’s high and more importantly below the ascending trendline. Furthermore, price tested the trendline earlier during late Asian/early session and failed quickly, affirming the strong technical bearishness that is happening now.

Even though we are currently pushing higher towards the rising trendline once again, the possibility of trendline holding is high, and the likelihood of price crossing above the rising trendline decreases with each increasing hour as we approach the confluence with 61.7 which will provide even more bearish resistance against current recovery rally. Furthermore, stochastic readings suggest that the previous bearish cycle that started since the 61.7 bearish rejection may not be truly over yet, with Stoch readings failing to enter into the Oversold region, suggesting that current trough seen in Stoch may not be long lasting and a stoch peak may follow soon.

Weekly Chart
USD/INR Weekly" title="USD/INR Weekly" src="https://d1-invdn-com.akamaized.net/content/pic5915ac11a6bff3578bd6dd797347f306.PNG" height="323.41379310345" width="undefined">
Looking at weekly chart, yesterday’s and today’s rally are far from testing the rising Channel Top, underlining current bearishness. However stochastic readings are flattening, and we are much close to the Oversold region, making it less likely for price to hit the lower end of the 59.0 – 61.0 consolidation. However, should short-term bullish momentum breaks 61.7, the resulting acceleration in bullish momentum may result in a retest and potential break of the rising Channel Top, which will invalidate current bearishness and revert initiative back towards the bullish side.

Fundamentally, USD/INR continue to have the potential for bullish surprises. USD is a tickling time bomb waiting to strengthen when the Debt Ceiling and Government Budget issues are resolved. When that happen it is possible that USD/INR may push up and change current bearish technical landscape. On the other hand, should US defaults, USD will definitely weaken which will drag USD/INR down. But, it should be noted that should US default, the impact is going to be long lasting, and hence USD/INR is likely to continue much lower as compared to USD/INR trading higher from these news. Hence, it become much more prudent to wait for the end game of the Debt crisis before traders commit into USD/INR shorts when the long-term benefits are huge.

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