From around the end of August, USD/TRY is trading below a short-term downside resistance line drawn from the high of August 30th. Although the pair keeps on forming lower highs, it’s struggling to make lower lows. The rate is finding it difficult to move below its key support area, at 5.647, which means that USD/TRY is forming a descending triangle. According to TA textbooks, such patterns tend to break to the downside, but we have seen in the past that sometimes it works out the opposite way. For now, we will remain neutral and wait for a clear break of one of our key levels, before we get excited about a further directional move.
A rate-drop below the above-mentioned support area, at 5.647, which is marked near the lows of September 4th and 12th, could attract more sellers, as the break would confirm a forthcoming lower low and place the pair below its 200-day EMA. This way we may target the 5.560 hurdle, which is the low of August 19th. The rate might rebound from there, but if it stays below the 5.647 zone, the bears may take it as a sign to step in again and take steering wheel. The pair could then slide again, possibly bypassing the 5.560 obstacle and aiming for the 5.510 level, marked by the low of July 31st and near the inside swing high of August 9th.
Our oscillators, the RSI and the MACD, are somewhat in support of the above-discussed scenario. The RSI is below 50 and points to the downside. The MACD, after topping on September 1st, has now moved slightly into the negative territory and sits below its trigger line, while pointing to the downside.
Alternatively, if the rate reverses north and breaks above both the downside resistance line and the 5.739 barrier, this may attract more buyers into game, as such a move may increase the pair’s chances of drifting higher. We will then aim for the 5.788 obstacle, a break of which could lift USD/TRY to the 5.854 level, marked by the high of August 27th.
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