Pound / Ruppee Rate Could Correct Higher in the Future

The Pound to Indian Rupee pair is in a long-term downtrend which has seen the exchange rate fall from 105.57 in 2015 to today’s 79.45 lows, only 21 months later.

The Rupee has been trading strongly in recent months as a positive economic and political outlook support its appreciation.

As a result, GBP/INR remains in a downtrend and the only bullish sign so far is the dramatic drop in the amount of momentum accompanying the most recent sell-off.  

This has created a bullish convergence on the daily chart between the exchange rate which is falling quite deeply and the MACD momentum indicator, which is not.

Such a mismatch indicates a high probability of a rebound higher beginning.

Whilst this will probably result in a correction back up to the 80-81 region, it does not indicate a reversal of trend – the correction will probably just be a temporary phenomenon.

The 78.81 lows of October 2016 are a key level, and a breach of them would reinvigorate the downtrend, leading to a probable move down to 78.00 initially and even lower eventually after that.

The weekly chart shows how MACD is also slowing on a broader timeframe, adding weight to the possibility of a rebound.

Note how the current lows are almost at the level of the lows of the October 2016 Sterling crash, however, MACD is nowhere near the lows if formed in October.

This is a bullish phenomenon and could indicate an imminent move higher when something triggers the backlash.