Turkish Lire Strength to be Temporary?

6th February 2017

Our view on both EURTRY and USDTRY has been consistently positive since last July’s bullish triggers in spot and RSI.  USDTRY rose more than 30% to last month’s high and EURTRY 25%. These gains have been supported by the 13 and 21 week mvg avgs and, for the most part, have tracked the upper band of positively trending weekly Keltner channels. Setbacks have been temporary and limited.

While there is no change to our view that the TRY will remain negative there are some warning signs that encourage added caution.

Last week saw strong profit taking setbacks in the 2 TRY currency pairs. These were not deep enough to test the moving averages in spot prices but have given negative crossovers in the RSI indicators. In addition the falls were the most aggressive since 2008.

Given the distance to the moving averages there is some way before any bear trend would be signalled but the key will be the Marabuzo lines created by last week’s declines (3.7820 & 4.0680 respectively). Bulls will be eager to see the market break back above those points to confirm a renewal of investor buying whereas a failure to breach, on a closing basis, will dilute further the current underlying tone.



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