In early trading this morning, the USD/TRY continues to sustain its price near an important support level which was last tested the third week of October. The USD/TRY has maintained a long bullish run higher, but the forex pair has produced a wave downwards the past three days. This occurred after high water marks were hit around the 8.58000 level on the 6th of November.
Suddenly, the USD/TRY is testing the 7.78000 support juncture last experienced in late October, and if it is punctured lower some speculators may have enough courage to target the 7.60000 mark. While this price trend can certainly continue, it should be pointed out that the 7.50000 level below could serve as a large barrier for the USD/TRY, and within its current price range the support junctures listed could create reversals higher which could be significant.
Traders may want to believe the current bearish momentum with the USD/TRY is the result of greater risk appetite globally, which is benefitting the Turkish lira’s drive towards better values against the USD. However, it should be remembered fundamentally from an outside perspective that Turkish government fiscal remains troubling and there is lackluster commerce data from the nation, which makes the sudden bearish cycle of the USD/TRY rather suspicious.
Speculators will have to swim dangerous waters if they want to seek bullish momentum, because it means they will have to go against the tide which has produced significant downward pressure the past few days. However, from a risk reward scenario, risk takers may decide there is more upside potential compared to further downside capability. Traders with the stomach to do so may be inclined to step in front of the short-term trend and buy the USD/TRY based on the notion that it is traversing important support levels, which may prove strong near term and cause reversals higher.
Yes, global risk sentiment is optimistic currently, but the USD/TRY has not enjoyed the benefits of risk appetite for a considerable amount of time. While the Turkish lira may in fact produce further bearish movement in the short term, pursuing a reversal higher may be the best speculative trade. The use of limit orders could prove practical by placing buy orders above current market conditions and trying to take advantage of developing trends which show they have strength.
Turkish Lira Short Term Outlook:
- Current Resistance: 8.03000
- Current Support: 7.73000
- High Target: 8.36000
- Low Target: 7.60000
