USD/INR: Rupee likely to extend Tuesday's rally

• USD/INR is likely to trade on the defensive, having formed a bearish Marubozu candle on Wednesday. 
• The pair could drop to key Fibonacci support at 71.19.

Indian Rupee is likely to remain better bid on Wednesday, according to technical charts. The uptick in China's Yuan could also bode well for the Indian currency.

The USD/INR pair created a bearish Marubozu candle on Monday, which comprises of long body and little or no shadows. Put simply, it indicates the sellers remained in control from the opening bell to the close of the day and is considered very bearish.

The bearish cross of the 5- and 10-day moving averages also indicates the path of least resistance is to the downside.

Further, Chin's Yuan is gaining ground against the greenback and could help the INR and other Asian currencies eke out gains. At press time, the USD/CNY pair is trading at 7.02, representing a 0.10% decline on the day. Yuan looks set to extend gains to 6.95. 

All-in-all, the pair looks set to test 71.19 (61.8% Fib R of 70.5490/72.24) in the short-term.

The decline, however, may not happen immediately if the technical correction in Indian equities gathers pace. The S&P BSE Sensex, India's benchmark equity index fell by 68 points on Tuesday on profit-taking, having rallied from 37,415 in a near-90 degree manner in the last six weeks.

Risk aversion in global equities cannot be ruled out, as China's industrial profits tanked 9.9% in October from a year earlier, the official data released at 0130 GMT.  

Technical levels