USD/INR Price Analysis: Darvas Box favors volatility expansion above 78.00

• A Darvas Box formation dictates a slippage in the standard deviation.
• The narrow gap between the 20- and 50- period EMAs favors the continuation of a consolidation phase.
• A power-pack action will be recorded if the RSI (14) violates the current oscillating range of 40.00-60.00.

A responsive buying action in the USD/INR pair after hitting a low of 77.42 has strengthened the greenback bulls for a while. The asset has displayed a lackluster performance from the last week after failing to overstep monthly highs at 78.12.

The formation of a Darvas Box on a four-hour scale is indicating an extreme squeeze in the volatility and a balanced auction profile. The asset is trading back and forth in a range of 77.33-78.12 for the past two weeks. Usually, a Darvas box formation after a vertical upside move dictates the presence of initiative buyers, which holds the potential of driving the asset higher.

An acute narrow gap between the 20- and 50-period Exponential Moving Averages (EMAs) is indicating the continuation of a balanced market profile.

The Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which signals the unavailability of any potential trigger to active power-pack action in the asset.

An upside break of the Darvas Box above monthly highs at 78.12 will send the asset into uncharted territory. The asset may find hurdles near the round-level resistance at 78.50 and psychological barricade at 79.00.

On the flip side, the Indian rupee bulls could gain control if the asset tumbles below May 17 low at 77.34. This will open doors for more downside move towards April 27 high at 77.07, followed by May 3 high at 76.82.

USD/INR four-hour chart