USD/TRY Signals Bullish Continuation with a Range Breakout

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USD/TRY Signals Bullish Continuation with a Range Breakout

In December, the USD/TRY (US Dollar/Turkish Lira) retreated from a new high on the year at 2.4170. After a couple sessions of bearish correction, the pair started to consolidate in a narrow range roughly between the 2.3065 low and 2.3250 resistance area.

USD/TRY 4H Chart 12/30
usdtry 4h chart 12/30
(click to enlarge)

Correction/Consolidation: When we look at the 4H chart we can see that the correction and consolidation since mid-December has NOT taken away any bullish bias or momentum. The moving averages are still in bullish alignment, and even though price broke the 50-period SMA, it has stayed above the 100-, and 200-period SMAs. Furthermore, the RSI has held above 40 after tagging above 70, even 80, which reflects maintenance of the prevailing bullish momentum.

Bullish Continuation Breakout Today, during the 12/30 US session, there was some volatility and a breakout above the recent range resistance, thus signaling a bullish continuation scenario. At first, we saw some fierce rejection that brought the price back into the range, but so far, traders are keeping the breakout in play. A close today above 2.34 would be a clearer bullish continuation signal.

When we look at the monthly chart, we should be even more convinced of the bullish outlook.

USD/TRY Monthly Chart
usdtry monthly chart
(click to enlarge)

Secular Bull Market: The monthly chart shows a secular bull market since 2008. There are no sign of topping or exhaustion, though we can say that the RSI appears to show an overbought market, especially with a potential bearish divergence forming. However, these “overbought” signs are often false, or leads to insignificant consolidations, during a persistent bullish market as we have in the USD/TRY.

Bullish Continuation: This year’s bounce from a previous resistance around 2.07 shows that the market is still bullish. The December candle is also a strong bullish continuation clue.

Short-term Target: With the long-term outlook still bullish, and a short-term range broken. USD/TRY is poised to at least test the 2.40 area in the short-term.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.