EUR/INR: Triangle breakout to provide an extension to the rally

India Infoline News Service | Mumbai |

EUR/INR for last 6 months continues to move in an upward sloping channel. Though, the movement appears to be sideways, bullish bias is visible on multiple time-frames.

Consolidation in an intermediate uptrend
EUR/INR for last 6 months continues to move in an upward sloping channel. Though, the movement appears to be sideways, bullish bias is visible on multiple time-frames. Such a sideways movement resembles consolidation within an intermediate uptrend. On multiple occasions, the price has tested upper-trendline of the channel pattern since September 2013. Moreover, in shorter time-frame, barrier is reinforced by the 38.2% retracement of the previous rally. A break above 85.60 will lead to sharp acceleration in the price.

Attempting upper band of the rising channel
We expect the pair to move towards upper band of the rising channel placed above 87 mark in the near term. The uptrend is likely to remain intact as long as the currency holds the channel support on weekly closing which is at 84.

A possible symmetrical triangle breakout
Within the above mentioned pattern, the pair is attempting to breakout from a symmetrical triangle pattern. As triangles are considered to be continuation pattern, existing uptrend in the medium term chart is likely to continue from the support levels. Adding to it, EUR/INR is trading above both its 50-DMA and 100-DMA which is considered as strong support. Fresh buy signal in RSI accompanied with breakout from falling channel could provide a sufficient cushion for an extension of a rally.

Strategy
Given the expected breakout from the triangle pattern, EUR/INR could make a move towards target of 88 mark in the medium term. The uptrend is likely to remain intact as long as the currency holds the channel support which is at 84.
 

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