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Intermarket analysis – Nifty and USD/INR – April 2016

The present relationship between Nifty and USD/INR is contradictory to each other. Market structure and Price action analysis on both indicates the correlation between assets in a clear way. Current Price value of Nifty is 7850.45 and USD/INR is 66.60. Foreign investors are dominating the Market sentiment in Nifty and their behavior is moving price action.

Below is the Intermarket Analysis between Nifty and USD/INR on Daily chart. The current relationship is Negative Correlation which means rising USD/INR constitutes to Fall in Nifty and Falling USD/INR can influence the rise in Nifty. Intermarket relationships can temporary or permanent depending on factors influencing the price. There are few things we need to note before taking intermarket analysis into consideration, to know more about it – Read this article.

 Rising USD/INR constitutes to Fall in Nifty and Falling USD/INR can influence the rise in Nifty.

Co relation between Nifty and USD/INR

1. Both Nifty and USD/INR changed the direction in the beginning of March
When we look at the charts above, the symmetry between both assets becomes clear. Both changed the direction at the same time, Nifty turned upside where USD/INR turned down. Price action in both assets led to an impulse movement.

2. Congestion below the Moving average – indicates the market positioning reason
After breaking the MA, both USD/INR and Nifty congested around the MA. Congestion is term used by institutional traders to refer tight and volatile ranging market. In such conditions market shakes out weak hand players, where smart traders use it to place themselves. Congestion in both assets proceeded in same time with minor difference.

3. Markets are now at inflective points and Traders should watch Price action
There is a three push setup in USD/INR, where Nifty doesn’t have any specific price action formations except a minor trend line at the top. Assets have respective key levels at specific points – Nifty has resistance at 8000 and USD/INR has support at 66.00. It’ll be interesting to watch how this entire relationship plays out in near future.

As usual traders should focus on Price action and keep a tab on Market sentiment. Current relationship is due to behavior of foreign investors. I cover important trading strategies of Intermarket analysis in my trading course.


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About the Author:

Balaji is a Speculator, Investor and Trader (All in All!!!) and self published author. Trading in the Markets since decade, have seen more ups and downs along with institutional trader's lifestyle. He usually trades Nifty, Bank Nifty, Commodities, Futures cum Options around both Indian and global Markets. Balaji applies highly analytical and systematic Price Action strategies He blogs passionately about Trading strategies, Price Action Trading, Technical analysis, Macro events, Market setups, Financial and Economical topics. Apart from Trading and Blogging, Balaji also mentors aspiring Traders and Investors on becoming successful in highly competitive financial Markets.

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