USD/TRY: decline continues

November 20, 2015

Current trend

A downward trend in the USD/TRY pair has been strong since 1 October. The demand for the TRY grew when air strikes began in Syria. Turkey is Syria's neighbor and serves as an important transit hub for oil supply to Europe from the Middle East. Increased risks, related to possible disruptions in oil supply, are raising demand for the TRY. Moreover, the currency gained more support when Turkey's ruling Justice and Development Party won a parliamentary election.

According to FOMC Minutes, released on Wednesday, December hike in US interest rates is still seen possible in case of favorable labour market and inflation statistics.

Support and resistance

The price remains within an upward channel on the weekly and daily charts. At the same time, OsMA and Stochastic on the 4-hour, daily and weekly charts recommend short positions, thus, a downward correction may continue to the support levels of 2.8100 (EMA144), 2.7450 (EMA200 on the daily chart). There is the lower border of the upward channel on the daily chart between the abovementioned levels, therefore, the price may consolidate in this area.

Support levels: 2.8100, 2.8000, 2.7800, 2.7450.

Resistance levels: 2.8700, 2.8940, 2.9100, 2.9400, 2.9450, 2.9650.

Trading tips

Long positions can be opened after the consolidation above the level of 2.8460 with targets at 2.8605, 2.8750 and stop-loss at 2.8400.

Short positions can be opened if the price falls below the level of 2.8360 with targets at 2.8240, 2.8150 and stop-loss at 2.8410.

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