As we can see from the chart of TRY/JPY, even though the Japanese yen received some attention as a safe-haven during this equity turmoil, still, it seems that the Turkish lira’s recovery is stronger, which continues to push the pair upwards. TRY/JPY is trading above its short-term upside support line taken from the low of the 13th of August. As long as that line remains intact, the pair could continue traveling higher.
For a better confirmation of the upside scenario, we would like to see a break above the 19.24 resistance area, marked by the high of the 1st of October. If the move happens, this is when we will start examining the next potential area of resistance at 19.85, which acted as a temporary support zone on the 9th of August. If the bulls remain in control, a further acceleration of the rate could lead TRY/JPY towards a test of the 20.45 hurdle, marked by the low of the 6th of August.
The RSI is currently above 50 but flattened somewhat slightly below 70. The MACD is running flat near the zero line but is trying to remain in the positive zone by pointing to the upside. For now, we cannot easily rely on our oscillators, so we will shift our focus mainly on the price action itself.
With regards to the downside, for us to take the bearish side, at least for the short-run, we would need to see a break below the aforementioned upside support line and also a close below the 18.15 level. That level acted as both, good support on the 4th of October and resistance on the 20th of September. This way we could get comfortable with the idea that TRY/JPY could fall a bit more. Initially we will look at the possibility for the pair to hit the 17.45 obstacle, a break of which could open the way for the 16.95 barrier, marked by the strong resistance of 5th of September and the 31st of August.
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