The Hindu Business Line : Rupee seen flat against the dollar

The down move that commenced at the July 2006 peak at Rs 47.04 halted at Rs 39.08 in October 2007 with a classic five-wave formation that characterises impulse waves (moves in the direction of the trend) as per Elliott Wave rules. If we place this move within the long-term charts, it is apparent that the decline from July 2006 is the third leg of the move that commenced from May 2002, when the currency pair halted just a whisker short of Rs 50.

Since a three-wave move appears to have been completed from the 2002-peak, the currency pair could spend a few more months moving sideways between Rs 39 and Rs 43. Over the longer term, a move lower to Rs 38 is a distinct possibility.

1-month view

Following a consolidation between Rs 39 and 39.9 in the four months to February 2008, a nascent uptrend is currently in progress. But the struggle over the last few sessions to move above Rs 40.1 implies that the currency pair can head lower towards Rs 39.33 or even Rs 39 over the next month.

The view will be altered only on a close above Rs 40.4.

5-day view

The currency pair was vacillating in a narrow band between Rs 40.10 and Rs 39.85 over the last 5 trading sessions. It is hovering just above the key short-term support at Rs 39.9 where both the 50 as well as the 200-day moving averages are positioned. A converging triangle is being formed over the last six sessions with neutral implications.

USD-INR pair could continue in the range between Rs 39.7 and Rs 40.1 over the next five trading sessions.

Supports – 39.65, 39.6, 39.4

Resistance – 40.05, 40.1, 40.3

Lokeshwarri S.K.

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