Pound's Rally Against Rupee Meets Formidable Resistance at 84.00
The Pound to Rupee exchange rate (GBP/INR) has surged over recent weeks as political risk in the UK has eased leading to renaissance in the Pound.
The GBP/INR exchange rate has rallied up from mid 81s to the 84s where it is currently trading.
Whilst the short-term trend is very much bullish the pair has now reached sever major resistance levels – that is points on the chart where the up-trend is likely to encounter resistance, and could stall or reverse.
The first of these levels is a trendline joining the tops of the December 2016 and January 2017 highs, labelled Trendline A, and the second is the 50-week moving average, which is not shown on the daily chart below, but which is at the 83.98 level – only three points below the 84.01 current exchange rate at the time of writing.
Both these could lead to a reversal in the pair and a move back down into the middle of the range which has developed over the last 9 months between 78 lows and 87 highs.
For confirmation of a breakout we would look for a move definitively above the trendline, signalled by a breach above the 84.63 highs.
Such a move would be expected to move sharply higher towards a target at least the 87.00 level of the December highs, possible even higher, as breakouts from ranges often move at least the same distance as the height of the range at its widest point again, or at least the 61.8% of that height.
61.8% is a Fibonacci ratio which corresponds with the Golden Mean, or Golden Ratio, which governs proportions in nature and it is said in financial markets too.
