USD/TRY edged north yesterday, breaking above the resistance (now turned into support) barrier of 5.2800. However, the advance was stopped slightly above the 5.4300 zone and the 200-EMA and today, the rate pulled back. On Monday, the pair emerged above the medium-term downtrend line taken from the peak of the 30th of August, and as long as it continues to trade above it, we would consider the short-term outlook to be somewhat positive.
If the bulls are willing to jump back into the action soon, we would expect them to aim for another test near the 5.4300 zone and if they managed to break it, we could see them extending the recovery towards the 5.5300 hurdle, defined by the peaks of the 9th and 13th of November. Another break above 5.5300 could set the stage for the 5.6200 territory.
That said, our short-term momentum studies suggest that some further retreat may be on the cards before, and if, the bulls decide to take charge again. The RSI turned down after it hit resistance near its 70 line, while the MACD, although above both its zero and trigger lines, has topped as well.
Nevertheless, as long as such a retreat stays limited near the 5.2800 or 5.2300 zones, we would still see a cautiously positive near-term picture as the rate would still be trading above the aforementioned medium-term downtrend line. We would like to see a clear break below 5.1400 before we assume that the bears have gained the upper hand. Such a dip would confirm a forthcoming lower low on both the 4-hour and daily charts, and may open the path for the low of the 3rd of August, at around 5.0500, or the psychological area of 5.0000.
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