Indian rupee

After spending almost 3 months consolidating in an unusual “low volatility” trading range, the dollar may be headed for some swift moves ahead. The RSI indicator (in pink) given in the lower ender of the chart pasted above has broken the falling trend line to the upside. This kind of a breakout in an indicator presages that price too will break out in the same direction – meaning $/inr will break out of the triangle pattern towards 47.50
47.50 is critical as a sustained breach of this level will see the rupee trip all the way towards 48.80-49.
The MACD indicator also supports the view that momentum could be building in favor of the dollar.

DOW JONES INDUSTRIAL AVERAGE

The US benchmark index-Dow Jones – one of the best barometers of business confidence is showing signs of topping.
The chart pasted above reflects that the multi month rally that began in March 2009 is losing steam as a clear sense of exhaustion seems to be settling in. Price action has formed a classic “head and shoulders” pattern and this in itself is one of the most reliable topping patterns in charting analysis. This is significant because we could see the Dow head towards sub 8000 levels by March 2011.
This in turn would imply that the US economy would likely face renewed headwinds and thus be weaker in the next FY: 2011-12 , causing risk aversion and volatility to soar . If the past is anything to go by, we should see the dollar rise in response.