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USD/TRY (U.S. DOLLAR/TURKISH LIRA)

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USDTRY

U.S. dollar is gaining strength against most of the developed and emerging market currencies. I analyzed USD/TRY in the previous updates and drew attention to the bullish outlook on the dollar versus Turkish Lira. In mid-2011, cross rate broke above 1.75 levels and since then it has been consolidating between 1.75 and 1.90. Last year’s consolidation appears to be a flag formation; usually considered to be a bullish continuation pattern. As long as 1.75 holds as a medium-term support, breakout to higher levels will remain likely. Breakout above 1.83 levels could initiate another upward spike on the USD/TRY towards 1.92 levels.

USD/TL

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USDTL

1.75 levels has been long-term support for the USD/TL. In the last quarter of 2011, cross rate breached above 1.75 levels and since then price has been consolidating above this critical technical support level. Over the past week, cross rate rebounded from the horizontal support to test the year-long trend resistance at 1.80 levels. Breakout above 1.80 can push USD/TL towards 1.92 levels. Breakout on the RSI could be the early warning signal for a possible breakout on the price chart. Above 1.80 levels expect further weakness for Turkish lira.