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.
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.
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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