Looking at the above Chart Rupee is forming Bull Flag pattern Formation where it has just tested the lower level trend line and showing sign of reversal and is expected to test the higher trend line of the Flag which is expected at point E at 60.50 per dollar. Sustain closing above 60.50 per $ on closing basis will given a confirmation of the Bull Flag Pattern Breakout. Looking at the Height of the Pole which is from 53.60 per Dollar base to the top of 60.70 per Dollar, difference comes to 7.1 (63.6 - 60.7 = 7.1)
I am looking a Bull Flag pattern Break out at point E of 60.50 per$ and crossover above the same can add the difference of the pole which is 7.1 bringing to the target of 67.6 per$ in near to medium term. After the break out I am expecting it to take minor resistance at 63.7 per$ and then will move to test the higher level of 67.6 which will be the ultimate target.
Correction might be seen only if sustain closing is seen below 59 per $ on weekly closing and failure of the Bull flag pattern formation which will be void.
1.
Sharp Move: To be considered a continuation pattern,
there should be evidence of a prior trend. Flags and pennants require evidence
of a sharp advance or decline on heavy volume. These moves usually occur on
heavy volume and can contain gaps.
This move usually represents the first leg of a significant advance or decline
and the flag/pennant is merely a pause.
2.
Flagpole: The flagpole is the distance from the first resistance or support break to the high or low of the
flag/pennant. The sharp advance (or decline) that forms the flagpole should
break a trend line or resistance/support level. A line extending up from this
break to the high of the flag/pennant forms the flagpole.
3.
Flag: A flag is a small rectangle pattern that slopes against the previous trend. If the
previous move was up, then the flag would slope down. If the move was down,
then the flag would slope up. Because flags are usually too short in duration
to actually have reaction highs and lows,
the price action just needs to be contained within two parallel trend lines.
4.
Pennant: A pennant is a small symmetrical triangle that begins wide and converges as the
pattern matures (like a cone). The slope is usually neutral. Sometimes there
will not be specific reaction highs and lows from which to draw the trend lines
and the price action should just be contained within the converging trend
lines.
5.
Duration: Flags and pennants are short-term patterns
that can last from 1 to 12 weeks. There is some debate on the timeframe and
some consider 8 weeks to be pushing the limits for a reliable pattern. Ideally,
these patterns will form between 1 and 4 weeks. Once a flag becomes more than
12 weeks old, it would be classified as a rectangle. A pennant more than 12
weeks old would turn into a symmetrical triangle. The reliability of patterns
that fall between 8 and 12 weeks is debatable.
6.
Break: For a bullish flag or pennant, a break
above resistance signals that the previous advance has resumed. For a bearish
flag or pennant, a break below support signals that the previous decline has
resumed.
7.
Volume: Volume should be heavy during the advance
or decline that forms the flagpole. Heavy volume provides legitimacy for the
sudden and sharp move that creates the flagpole. An expansion of volume on the
resistance (support) break lends credence to the validity of the formation and
the likelihood of continuation.
8.
Targets: The length of the flagpole can be applied
to the resistance break or support break of the flag/pennant to estimate the
advance or decline.
