EUR/TRY has been in a rally mode recently, trading above a tentative upside support line drawn from the low of December 1st. The Turkish currency has been under pressure due to tensions between the US and Turkey over Syria and Turkey’s purchase of Russian S-400 missile defense system. Yesterday, the rate emerged above the 6.5665 barrier and continued drifting higher today. As long as EUR/TRY continues to print higher peaks and higher troughs above the upside line, we would consider the near-term outlook to be positive.
If the bulls are strong enough to stay in the driver’s seat, we may then see them aiming for the 6.6468 barrier, which is near the high of June 25th. If they don’t stop there either, a break higher could extend the trend towards the peak of June 14th, at around 6.6945.
Taking a look at our short-term oscillators, we see that the RSI lies above 70, pointing up, but the MACD, even though above both its zero and trigger lines, shows signs of topping. Both indicators detect positive momentum, but the topping signs of the MACD suggest that a corrective pullback may be in the works, perhaps from current levels, or after the rate tests the 6.6468 zone.
In order to start examining the bearish case though, we would like to see a clear and decisive dip below 6.4950. Such a move would also bring the rate below the pre-mentioned upside line and may initially aim for the 6.4500 zone, which is near Monday’s low. If the bears are not willing to stop there, then a break lower may allow them to push towards the 6.4145 hurdle, which is fractionally above the low of December 12th.
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