US DOLLAR / TURKISH LIRA (USD/TL)

Thanks everyone for participating in the poll on what to read at Tech Charts. The feedback has been valuable. As there are plenty of opportunities in the financial markets it is important to filter them and present the widely followed instruments on a daily basis. Though this post is not one of them, many of my friends who are investing in Turkish equities and are following this currency on a day to day basis kindly asked me to post an update on this specific topic.

It is a timely request as USD/TL has been one of my favorite breakout and pullback pattern for the past one year. As you can see from the long term chart, USD/TL broke out of a decade long cosnolidation range in 2011 at 1.76 levels and quickly reached 1.91 levels. Since then the crossrate experienced a nice pullback to that long-term consolidation range. What makes 1.76 levels strong is the overlap of the horizontal support and the 200 day moving average at the same level.

We can see last 4 month’s flat consolidation range much better on the daily scale. With USD/TL reaching 1.74-1.76 area it is now time to expect a rebound from these levels towards 1.80-1.85 area. Three major support levels are holding the crossrate from moving lower. RSI is oversold and is signaling a rebound on the crossrate. US dollar should gain strength against Turkish Lira.