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In our analysis of the rupee published on June 29, 2013, we had written, “a new leg of the structural downtrend is in motion since January 2008. According to Elliott Wave Analysis, one zigzag pattern could have been completed last June. If another zigzag is evolving now, we get the minimum target at 64.9. This will take a few more months to form. If this target is crossed, we will have to look at a level beyond 70.” We retain this view.
The USD-INR pair hit the low of 65.5 last week and reversed higher. Immediate resistance that needs to be watched now is at 61. The short-term outlook will remain negative as long as this level is not surpassed.
If the currency vacillates in the band of 61 and 66, it will keep open the possibility of a decline towards the 70 mark.
Next hurdle around 57 is also a medium-term resistance for the rupee and is not likely to be crossed in a hurry.
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