By Patricia Lui
April 8 (Bloomberg) -- India’s rupee may strengthen against the dollar after the U.S. currency showed two “bearish signals,” said Winston Tang, a technical analyst at Forecast Pte in Singapore.
The dollar-rupee weakened below the 50-day moving average of 50.0558 on April 6 and also broke an uptrend line from Dec. 19, Tang said. The rupee will extend gains toward its first target at the 100-day moving average of 49.43, Tang said. A break there would see it advance to 48.50, a so-called “congestion level.”
“These to me are very bearish signals,” Tang said. “The uptrend from December has been broken and the bearish sign is further confirmed by the close below the 50-day moving average, another bearish signal.”
The rupee closed at 50.0550 to the dollar on April 6, according to data compiled by Bloomberg. Indian markets were closed yesterday for a public holiday.
India’s currency is down 2.9 percent so far this year after plunging 19 percent in 2008, making it the second-worst performer after the South Korean won.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
To contact the reporter on this story: Patricia Lui at plui4@bloomberg.net
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