USD/INR clocked a high and low of 69.04 and 68.35, respectively, on Tuesday before closing at 69.01. Essentially, the pair created a bullish outside-day candle – the day began on a pessimistic note, but ended with optimism.
So, the immediate bearish setup, as indicated by the downward sloping 5- and 10-day moving averages (MAs) and lower highs, lower lows stands neutralized.
A short-term bullish reversal would be confirmed if the spot closes today above 69.04 – the high of the bullish outside-day. That looks likely as the 14-day relative strength index (RSI) is still reporting oversold conditions.
That said, a close below 68.35 – the low of the bullish outside-day – would signal a continuation of the sell-off, although, with oil rallying, the downside looks limited.