USD/TRY rallied again today, breaking above Tuesday’s peak of around 5.7440. That said, the advance was stopped slightly above the 5.7767 barrier, which offered resistance on July 8th and 12th, and then the rate retreated somewhat. On Monday, USD/TRY emerged above the downside resistance line drawn from the high of May 9th, and from there onwards it continued climbing north. Thus, we would consider the near-term picture to be positive.
The rate may continue correcting lower for a while and perhaps challenge the 5.7440 zone as a support this time, from where the bulls may take charge again and aim for another test near 5.7767. If they manage to overcome that obstacle, then such a break may set the stage for extensions towards the 5.8260 hurdle, which stopped the rate from moving higher between June 20th and 25th.
Taking a look at our short-term momentum studies, we see that the RSI ticked down from slightly above 70, while the MACD, although well within its positive territory, lies below its trigger line and shows signs of topping as well. These indicators support the case for a minor retreat before the next leg north.
In order to start examining the case for a larger downside correction though, we would like to see a decisive dip below 5.7040. Something like that could trigger declines towards the 5.6706 level, which is the Monday’s high, the break of which may extend the slide towards the upside support line drawn from the low of August 8th, or the 5.6355 hurdle, defined by Tuesday’s low.
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