USD/INR Price News: Indian Rupee is testing daily flag counter-trend line

• USD/INR bulls are staying on the sidelines while the US dollar consolidates.
• US 10-year yields are testing the trendline support and could be expected to rise from here. 

USD/INR is trying to breakout of the bullish flag pattern on the daily chart but there is a lack of conviction in terms of the US dollar. The greenback has been stuck in a sideways range and trapped between support and resistance. The following illustrates the various component to what is required for a breakout in USD/INR.

USD/INR daily chart

The price has been trying to break the trendline resistance of the daily flag but, so far, there has been a lack of follow-through. However, the pullback to the test of the counter trendline is a healthy prospect for bulls waiting on the sidelines.

As illustrated, the market structure remains bullish while the price is nestled in at the counter trendline as well as the horizontal support structure. While above this area of support, an upside bias persists. The bulls will be banking on higher US rates as the 10-year yield meets support at the daily dynamic supporting trendline as follows:

If the US yields continue to move higher at this juncture, then the US dollar would be expected to follow suit. The price is DXY, however, could be on the verge of a reverse head and shoulders, so long as the support of 93.78 holds up. We now have the makings of a reverse head and shoulders as well, which is bullish: