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Nifty v/s USDINR

18 Jan 2021 ‚óŹ 07:03 AM

For months now the INR has diverged from the Nifty in strength. The INR just fails to get strong enough. USDINR has not yet broken the low made in Sept. I tried getting bearish on that at the end of Nov, did not work. Now in Jan we even have a short-term divergence where the new highs in Nifty after 4th of Jan were not confirmed by USDINR. This short term inter-market divergence is also a general worry sign for the Nifty. Now that we are in the late stages of wave 5 and into the season topping months for Indian stocks it is worth noting. the divergence may trigger a deeper correction at some point of time that should then lay the stage for USDINR to go back to 78.60 in wave E of 5. I sense it would be a fast move. We are now sitting on 2 support levels, the weekly Bollinger band and the monthly 20MA both near 72.80. So unless we break 72.80 USDINR could turn up from here.

For the Nifty, it has already achieved the top end of this rising channel in wave 5. Marking the final highs of wave 5 are not going to be easy, and usually, the market will try to fool me somewhere. I must work knowing this fact. So using this wisdom, this is not a time to be too complacent. World markets are helping by holding their own but we have run a long way. And it's time.

The 40-day A/D ratio did the secondary rally in the broad market that I anticipated in Oct, usually accompanies wave 5. Now it could see another downdraft.

The 20-day A/D ratio has been diverging from the market for quite some time, but it needs waiting for the market to confirm that these readings play out because they never do so immediately.

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