Monday August 13, 2018 - 10:38:42 GMT
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Forex: Is There a Hidden Hand Defending USDTRY 7.00?
When in uncharted territory (e.g. USDTRY trading at a record high), trying to pick a top or a bottom, as the case may be, in a currency is guesswork. The reason is that there are no key chart levels to focus on other than the record high (or low). This makes the most recent high (or low) the only key chart point worth noting as there are no key stops to go after unless that high is broken. On the other hand, downticks are likely to be met with buying until there is evidence that a high (or low) is in place.
This leaves the market in an unstable state as it looks for any other levels to focus on that would be taken as signs that the trend is ready to accelerate further or may be running out of steam or at least trying to pause. This is the case with USDTRY, which gapped high to start the week to test 7.00+ and increasing its appreciation to more than 100% over the past 13 months.
Why Is USDTRY 7.00 Important
While by itself 7.00 holds little significance other than it is a round number, the fact that USDTRY has made several attempts today to move above it only to be repelled has some speculating that there may currently be a hidden hand trying to defend this as a pivotal level.
What that means for traders is that in the absence of any key hart levels other than the new record high, 7.00 has become the focal point as how USDTRY ultimately trades vs. it will dictate whether market forces push it even higher or take a breather.
Whether some entity is trying to keep USDTRY from trading above 7.00 is left to the conspiracy theorists but it has given the market a focal point in what is seemingly a black hole on charts.
What Else May Give a Sign of a USDTRY Top or Pause?
Since EURUSD (and EUR crosses) are correlating with TRY weakness (i.e. firmer USDTRY) as European banks are seen as most exposed to the Turkish crisis, look for any signs of any easing of pressures on this currency. In this regard, the best way I know to do this is by using our Amazing Trader program, which shows key EURUSD supports at 1.1370 and 1.1309 ahead of a void until 1.1117 (low today 1.1365).
Jay Meisler, co-founder
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