The basic Elliot pattern consists of a five-wave pattern followed by a three-wave correction. The rupee is currently in the fifth wave, chartists said.

"We are in a rising channel formation and a terminal rally is on, which could take the rupee to 47.05 by December," said Mr Rahul Badhwar, senior manager in corporate treasury sales at HSBC.

In the morning trade, the rupee was quoted at 46.30/31 per dollar, compared with its previous close of 46.32/325. The rupee, convertible only on the current account, has fallen by more than six per cent against the dollar since the start of the year on high global oil prices and flagging foreign capital inflows. Though crude prices remain volatile, and will remain a key factor in determining the rupee's movements, currency chartists said they expected the dollar rally to lose steam around Rs 47. "The current trend can be interpreted either as the fifth wave in a short-term frame or a part of wave three on a slightly longer term," said an analyst with a foreign bank, adding that both cases suggest a correction. However, Mr Jackin Lo of Standard Chartered Bank, Hong Kong was more optimistic on the rupee. "From a short-term standpoint, the rupee is very toppish and ideally should correct in the 46.40-46.50 range," he said.

But Mr Lo agreed that the rupee's drop would resume after a brief respite. Traders stressed that the nature of the Indian market prevented them from setting a time-frame for the end of the current move. "It is a thin volume, developing market where the controls are still wielded by the government, making it futile to set a time limit," said a senior dealer at a textile firm.

However, he said traders should be careful before going long on dollars given the negative divergence of the spot value of the rupee vis-a-vis its indicators. Analysts said the currency was posting new lows whereas the Moving Average Convergence Divergence (MACD) line was not, resulting in a divergence. "But before the rupee reaches the target of the move which started at 43.65 there is likely to be a pullback to 46.15-46.18 level," the textile firm dealer said.

The rupee is seen trading in a 40 paise (0.40 rupee) range over the next 30 days, analysts said. "In the short term, I see the rupee between 46.20 and 46.63 to a dollar before the move to 47," HSBC's Badhwar said. The rupee closed at 46.32/325 to a dollar on Tuesday, some 6.1 per cent weaker from its January level. The technical outlook of weakness for the currency is supported by fundamental factors like firm global crude prices, a declining euro and bearish stock markets, the foreign bank analyst said.

JP Morgan said in a market commentary it expected the rupee to slip on account of the currency's strength in real exchange rate terms and the impact of oil prices.

However, its forecast of 47 to a dollar by the month-end was steeper than chartists' forecasts.