GBP/INR Gapping Higher as Novice Uptrend Takes Root

The Pound to Indian Rupee has rebounded sharply, forming a very bullish gap higher this morning (Wednesday).
The exchange rate is now putting upside pressure on a major trendline at about the 80.80 level, attempting to break above it.

Given the steepness of the move up from the 79.55 lows in the last few days, the exchange rate is expected to break above the trendline eventually, and move up to a target at 81.60 where an old support and resistance line is situated.

In our week ahead forecast we highlighted the bullish convergences between exchange rate and momentum on both the daily and weekly charts, and how these provided an early warning of the rebound. The pair has now followed through in line with these early bullish signs.

Despite the strong rebound the longer-term trend remains bearish and until the trendline is actually broken could still resume.

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.