USD/INR Technical Analysis: Drops to weekly lows, around 71.70-65 region

• USD/INR retreats sharply from multi-month tops, set earlier this Wednesday.
• The set-up favours bulls and support prospects for some dip-buying interest.

The USD/INR pair retreated farther from four-month tops set earlier this Wednesday and dropped to the lower end of its weekly trading range, around the 71.70 region in the last hour.

The pair has repeatedly struggled to find acceptance above the 72.35-40 supply zone and remained well within a multi-month-old trading range, forming a rectangle on the daily chart.

The intraday pullback has now dragged the pair to the 38.2% Fibonacci level of the 70.33-72.57 recent move up, which is followed by strong horizontal support near mid-70.00s.

The latter coincides with 50% Fibo. and 50-day SMA support near the 70.30 region, which if broken might be seen as a key trigger for bearish traders and pave the way for further decline.

Meanwhile, technical indicators on the daily chart – though have eased a bit from higher levels – maintained their bullish bias and support prospects for the emergence of dip-buying interest.

Hence, any subsequent slide towards the mentioned support levels might still be seen as an opportunity for initiating some fresh bullish bets and should thus, help limit the downside, at least for now.

On the flip side, the 72.00 handle (23.6% Fibo.) now seems to act as immediate resistance and any subsequent positive move might continue to confront stiff resistance near the 72.40 region.

A sustained breakthrough the mentioned barrier will mark a fresh near-term bullish breakout and set the stage for a move towards the 72.75-80 supply zone en-route the 73.00 round-figure mark.

USD/INR daily chart