Following last week’s historic plunge due to intervention tactics by the Turkish government and central bank, USD/TRY recovered after hitting support at 10.20 on Dec. 23 and is now showing respect to an upside support line taken from the low of Dec. 24. In our view, this has changed the short-term picture back to positive.
We believe that a break above 13.40 could initially target the peak of Dec. 21, at 14.00, whereas another break could extend the advance towards the high of Dec. 13, at 14.60. If the bulls are not willing to stop there either, then a break higher could carry more significant bullish implications, perhaps paving the way towards the inside swing low of Dec. 17, at 15.63.
Shifting attention to our short-term oscillators, we see that the RSI moved higher, and it now lies slightly below its 70 line. However, it ticked down again. The MACD runs above both its zero and trigger lines. Both indicators detect upside speed, which supports the case for further advances in this exchange rate, but the fact that the RSI ticked down makes us careful over a potential pullback before the next leg north.
On the downside, we would like to see an apparent dip below today’s low of 12.40 before switching our view to bearish. This could confirm the break below the aforementioned upside line taken from the low of Dec. 24. The bears could first target the 11.90 barrier, marked by the inside swing high of Dec. 28, where a break could see scope for declines towards the low of Dec. 27, at 10.75, or the low of Dec. 23, at 10.20.