Since last 5
years US Dollar was appreciating against Indian Rupee. It made a high of 69.20
in February 2016. But now the trend will change soon. If USDINR breaks 66.15 on
closing basis, it will give confirmation of down trend. Second level
confirmation will come below 66.
On Daily
chart, USDINR has already given sell below 66.72. It has created Island
Reversal pattern. Now 200 days simple moving average placed around 67.35 which
will act as a resistance. Now support will be in the range of 66-66.15. Below
that support we may see a sell- off in the US dollar.
USDINR has
broken major support line on monthly chart in March and made a low of 66. After
making a low of 66.15, it retraced 61.8% and made a lower high of 68.25
(Support line has become Resistance line). If USDINR gives close below 66.83 on
monthly chart, it will be engulfing bear candle which is also bearish pattern.
Normally
there is 30 paise difference in USD spot and one month future. That 30 paise difference
is basically interest rate differential between two countries. Now Spot is
around 66.50 and October future is around 66.80. Let us assume spot will be as
it is for entire October month. So if we sell one lot of future at 66.80, it
will come down to 66.50 on expiry. So by selling one lot future we will earn Rs.300
per lot (0.30 * 1000) on investment of 1500.
To conclude,
one should sell USDINR October future at CMP (66.80) with stop loss above 67.50
for targets of 63 and 59.
