Rupee Short Term Outlook- 15th November, 2011

Rupee:
Support: 47.40 – 49 – 50
Pivot: 50.60
Resistance: 51.60 – 52.20 – 53.80

Rupee: A Flag (Bullish) follows a steep or nearly vertical rise in price, and consists of two parallel trend lines that form a rectangular flag shape. The Flag can be horizontal (as though the wind is blowing it), however it often has a slight downtrend. The vertical uptrend, that precedes a Flag, may occur because of buyers' reactions  to a favorable company earnings announcement, or a new product launch. The sharp price increase is  sometimes referred to as the "flagpole" or "mast". Flags are very similar to Pennants. However, with a Flag, the  price trend lines tend to run parallel, whereas with a Pennant, the price trend lines tend to converge. A bullish  signal occurs when the price rebounds beyond the upper trend line of the Flag formation, and continues the  original upward price movement. This is considered a pattern confirmation.    
 

Looking at the chart of Rupee has started its rally from 44.80Per$ and after testing the higher level of 50.5 per$ it has been in the consolidation phase where on lower side it was taking support at 48.98 and 48.86 per$ just below 49 per$ and reversal in prices were seen from lower level. On higher side it was facing  resistance at 50.5 per$ to 50.6 per$ and selling was seen from higher level. Recently it’s showing sign of give  positive Breakout above 50.65 per$ indicating breakout of the Bull Flag pattern. Pole of the Flag started from  44.8 per$ to 50.5 per$ where the difference comes to 5.7 where if we look at breakout above 50.65 per$ expected  target comes to 56.35 per$ in medium term. On the way up we might look at some resistance at level of 52 per$  and above 52 small resistance can also be seen at 53.5 per$ and 55 per$ where some intervention can be  expected from RBI side which might halt the Rupee for short term.

Report By
xDirect India