Slobodan Drvenica
Windsor Brokers
The USDTRY pair spiked to 3.8330, the highest in one month on Tuesday, after downside attempts were repeatedly contained by the base of rising daily cloud.
Fresh bullish acceleration broke above important resistance at 3.8131 (daily Kijun-sen) and 3.8262 (Fibo 38.2% of 3.9814/3.7303 pullback), but gains were so far short-lived, as subsequent pullback brought the price back below 3.80 handle.
However, signs of basing are evident as recovery rally from 3.7303 (correction low of 05 Jan where pullback from 3.9814 peak bottomed) formed higher highs and higher lows, signaling reversal.
Recovery broke above initial barrier at 3.7890 (20SMA) which now acts as initial support, but needs to close above cracked Fibo barrier at 3.8262 to generate stronger bullish signal for further retracement of 3.9814/3.7303 bear-leg.
Near-term price action is in the middle of thick daily cloud and extended recovery through cloud top (3.8963) is needed to confirm reversal.
Underlying uptrend is likely to resume, as Doji reversal pattern has formed on weekly chart and the greenback is regaining traction after suffering losses.
Focus turns towards Turkish Central Bank's decision on policy meeting on Thursday. Wide expectations that the CBRT will hold interest rates despite double-digit inflation are prevailing in the markets.
Such scenario would deflate lira and risk retest of recent USDTRY's record high at 3.9814 as well as challenge psychological 4.00 barrier, break of which would spark fresh bullish acceleration.
Res: 3.8131; 3.8262; 3.8558; 3.8855
Sup: 3.7890; 3.7816; 3.7666; 3.7606
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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