Making Sense

  In my previous post, I had indicated longs can be accumulated in the zone of 63.60 - 63.70.   On Friday, .Inr made a high of 63.695 ( prz for the bat pattern was b/w 63.60-63.70).  The CD leg of the bat pattern was characterised by a falling wedge.  Falling wedges in a rising market are indicative of a reversal / continuation. Trend line resistance for the wedge was at 63.75. We traded past the resistance to trade a high of 63.88.  Now target for INR is 64.15 with a stop at 63.68.

From The Economist Espresso: The shivers: America’s shrinking economy http://econ.st/1EAsEIF

USDINR has formed a nice BAT pattern on the hourly's -  targeting 63.60. Longs can be accumulated in the zone of 63.60 - 63.70. Also be mindful that 63.57 is the zone from where we reversed.

The trigger for the fall is largely being attributed to PBoC draining cash from the banking system on Thursday via "back-door repos” to the tune of 100 bn yuan in 7, 14 & 28 days contract.  Bloomberg reports that PBOC likely refrained from offering repos in open-market operations to avoid signalling a tightening of policy. China’s lenders are awash with funds after the central bank reduced interest rates three times since November and eased reserve requirements to help an economy growing at the slowest pace since 2009 (update to the earlier post below) Of note, SSEC fell 6.50% today after having risen almost 150% in a year. Couple of factors led to the fall: Central Huijin holdings (state investment fund) which until recently was not allowed to sell its stake in big banks has now been allowed and offloading of big chunk lead to a massive sell off A decision from index provider MSCI, due on June 9, on whether to include domestic Chinese ...

GBPUSD is carving out a beautiful BAT pattern.  Attaching the snapshot for your reference. PRZ for the pair is 1.5170 to 1.5270. One can accumulate longs in this zone for a stop at 1.5112. Bat patterns are pretty liable patterns and have a high probability of success.

USDINR made a slanting H&S pattern. The neckline of the pattern was at 63.57. One would've gone short with a stop loss at 63.89 - the high of the right shoulder. Today that level was breached and we traded a high of 64.00. Failure of a technical pattern is potent for USD bulls. I am also seeing a double bottom with 63.50 as the tip of the pattern and neckline at 63.85 levels. Immediate target for USDINR is 64.20 which happens to be the earlier high.  On the monthly chart, I'm seeing the formation of a BAT (harmonic pattern) which opens the room for 65.82. Fundamentally, RBI has been constantly intervening in the Fx markets to augment its reserves plus also to create a line of  defense to curb excessive volatility as and when Fed decides to hike rates. Since we are a current account deficit country we rely on capital flows and a hike in rates in US will impact USD flows and outflows could be exacerbated due to broad portfolio rebalancing by FIIs ...

12th May 2015 - Quick snapshot 1.        The revenue department will not act on demands for minimum alternate tax on foreign investors nor will it make any fresh MAT claims 2.        Lok Sabha passes bill on Black money 3.        NDA may agree to demands to refer the GST bill to Rajya Sabha’s select committee and form a joint panel of Parliament to examine land bill 4.        Brent crude marginally lower @ 64.85 5.        10Y bond yield rose 8 bps for Spainish debt, 6 bps for German bunds 6.        Japan’s Meteorological Agency, first to project an El Nino in 2015 will release its monthly forecast today. 7.        India releases April CPI data today; reading is expected to be 4.9%. Inflation is expected to further ease from 5.17% for the month of march. RBI in its...

Hey people..  It's been a long absence.. I have been blessed with a baby and that explains..  I will be resuming my blogging now..  Analysing RBI's money market operations since beginning March, we observe announcement of variable reverse repo auctions. RBI in essence has been trying to maintain liquidity at current repo rate and not let the LAF window operate near reverse repo rate as that straight away amounts to 100 bps of rate cut. Monetary Policy Review (MPR) shows that RBI is cognizant of the extremely high asset valuations of riskier assets such as equity and lower rated debt instruments due to ultra-loose monetary policy of AEs. Our vulnerability to a crash has increased. Many economists and traders have issued a warning in this regard, most recent being Jamie Dimon. Mohamed El-Erian concedes that most asset prices have been pushed to very elevated levels and he is now “mostly in cash”. Upside risks to INR depreciation have only increased. So I would look to initi...