USD/TRY

I'm on the fence at this point in time. I am long, I hate to keep repeating myself about the fundamentals. There are a lot of places in the world (safer places) to send cash where one can get a decent return. The problem with Turkey is they really don't welcome short term inflows which is what going to happen now that Europe has cut rates. Even when the FED was in the middle of QE, the dollar strengthened over the Lira. Many investors are looking at inflation data and foolishly assuming that the CBRT will hold rates steady, even though they just lowered them and keep stating that June will begin a downtrend in inflation. As a bottom line, I think the Lira will flounder as long as Basci is running the show. Until Turkey returns to a normal monetary policy the Lira will remain soft. It will experience cycles of strength like we've seen so far this year but it will not sustain this strength.

Where the market will take the Lira from here is tough to say. The price action we've seen the last two weeks has been baffling to me. I think the market is curios what Basci will do with rates this month. I personally think he will lower them, possibly by a full point or more as he makes "serious cuts" to satisfy Erdogan. If he holds steady we'll see the 2.05 or better that the market is antsy to touch. But, to run this down right now is a gamble at best and I believe that investors know this. It will be difficult for them to unwind profitably when they are caught off guard by a rate cut. It's safer to follow what we already know.

That s enough for down. Stop loss 2.0885 my target is 2.15 for next week

Pa has been baffling indeed. I was short from yesterday, on which i just took partials. I'm seeing more downside on the pair for at least today maybe even a good day down to the 2.077 level.

On USDZAR same story, short from yesterday & took partials. I think USDZAR may test 10.60/10.50 level again before exploding upward.

Thanks Scotty, your analysis and insight is always interesting

From my point of view, price is currently in a very steep, narrow down channel on the 4 hr chart...GA -200 and ~160 pips wide vs the last down move when it was GA -96 and ~ 220 pips wide. The latest low was at a BRN - 2.0900 - a new low for this week. My next S&R is ~ 2.0870, also the 61% fib of the rally since mid May and today's S1 pivot and so far the PA is suggesting that this will be tested......TWT

Looking at the daily I think it could be another good leg down.

I was looking at their foreign exchnage reserves although I´m not sure how to add that into analysis, I know when pound was breaking apart BOE spent a whole lot of their reserves to defend the currency. Looking at the chart they seem to have some powder left in the barrel. But like I said I don´t know how to take this into analysis, or if one should at all. If any of you know more about that please share.

I did just close out while typing ZAR had a spike and the conviction is gone out of TRY, and with NFP coming up

I've really cut back my long position. This is a waiting game for me now. The market seems sure that Basci will continue on with high rates. We'll see.

Few news items combined.

Turkey talking of more cuts after the first one. I think we were all pretty sure of seeing at least 2.13 this week even without this news so unexpected reaction here.

South African CB governor had statement today "not sure on futre policy atm". This while the last statement said: "It is clear we are in a rate hike cycle" ZAR also hardly affected by the fact that there still seems no resolution for the palladium miner strike, and another SA labor union frontman declaring today 70% of his union is ready to strike (this was in another sector)


Also another EM rate cut today. Mexico from 3.5 to 3.0. Only up 500 pips for the day, which also feels muted although I don't really follow this pair.

I'm not a fundamental analyst but could it be central bankers see a weaker dollar in the near term?

Is there any chance to avoid paying a huge swap on long USDTRY? Thank you.

Yes find a cheap broker, google for forex swap comparison.

Just a quick post here. I'm still convinced USDTRY will turn up, but damn the timing. The long down bar we saw Friday, in my opinion was a stop cascade/shakeout. I am curious to see what the market will do Monday. If this is true demand for the Lira there is no telling where the market will go. This could very well be flow/arbitrage stemming from money leaving Europe. Even as Turkey lowers rates they are still very decent. Its one of those things that's difficult to predict. As Hanover mentions in his profile, the market can stay irrational a lot longer than a trader can stay solvent. I am away from home at the moment, I plan on making a post this weekend about USDTRY statistics, a tool I use often. I hope everyone is enjoying their weekend.

Catching up for the weekend here. Very interested in your post with statistics. Hope you all had a great weekend too. Bank holidays tommorow could slow things down considerably.

Avoid holding long positions into the US close.....

and that of course is always THE question......I have 1/5 of a long postion that is underwater - although not as badly as this guy's new boat - an example of what can happen when amateurs go to sea without a professional captain....I added another buy at LO now with SL at +1 and waiting for NYO....

Haha!Yeah thats my boat Islander. I'd have posted a picture myself but my camera was jammed up with saltwater. Beautiful view you have otherwise.

I'm cautiously watching the current bear flag we are eyeing on the hourly. The market may very well break this and head on to 2.05. We are however getting close to our next rate meeting (June 24, 11 trading days). On the last long mechanical down run I got out at 2.10. The market continued down to 2.06. After the fact we learned that Japan was furiously buying turkish debt, this would be real demand. The source of real demand right now would be European money seeking yield. There could be many waves of this and the trade may be down. Like I said earlier in the thread, the rate differential should be able to predict the direction of the market but there are factors that override it, a big one being the attitude of the country to whom money is flowing. We know very well that Turkey does not like short term capital inflows.

I believe that Basci will continue lowering rates over the course of the next few months. This (in theory and practice) will turn off investors and the Lira will depreciate. We saw this very scenario during QE in the US.

2 scenarios:

Rate cut:

The market continues down to 2.05 or better, the CBRT then has further ammunition when it comes to lowering rates, which it will do, possibly delivering a shock to the market. We then turn up around the nearest June 24th low.

Rate held steady:

Certain analysts I've been reading are assuming that the CBRT will keep rates on hold due to stubborn inflation. If this were to happen we could see confidence in Basci increase and 2.0 or better would not surprise me. We'll then soon approach the August elections which could cause markets to pull back. It will be interesting to see if Erdogan can get on the ticket. The exchange rates have fluctuated wildly under his watch but domestic growth has been pretty good. Him getting on the ticket could add strength to the Lira.

I'd like to suggest reading the following analyst out of Turkey, his name is Seyfettin Gursel from "Today's Zaman" based out of Istanbul. I really respect what he has to say about the market, I apologize for not sharing this sooner. The following is a link to his piece on "Central Bank does not want appreciation of Lira." Anybody who is trying to follow this pair should bookmark this link and check the bottom of the page often as Gursel's most recent articles populate there.

https://www.todayszaman.com/columnis...n-of-lira.html

Statistics:

I promised I'd post some statistics that I pay attention to. The first chart I'm posting is the distribution of max/min prices of the day and the hour in which they occur. A few years ago I got the notion of "informative hours," and the idea actually held water. Not surprisingly, when those who are running the market are trading, the imprint their orders leave on the market are informative and/or have predictive value. The hours to watch closely are 04:00-07:00 GMT. This is late Asia and early London. The general direction these hours carve out often determine which way the market will continue the day of and the following day(s). Trivia question. Why should the spike of the 21:00 be ignored? Clue: The data being tracked is the bid price which is what MT4 uses.



Not surprisingly, the most volatile hours of the day are strongly correlated with the highs and lows of the day. When the market burns through several prices (becomes volatile), it reveals where stops could be safely placed. This information is filtered first with fundamentals and sentiment as I've been trying to do. So instead of me posting stop levels, refer to this information and this chart. So for example, today we'd have been buyers. Fundamentally we know this, we'd have confirmed this by looking at the 04:00-07:00 pricing which showed buying. The low of these hours would be our stop level @ 2.0746. They key is to hide behind the correct side of the volatility. I'm speaking primarily of day trading and highly leveraged positions. If you're trading softer then use whatever stop level you prefer be it percentage of equity (which I'm doing right now), or something similar.



You'll notice here that there are two distinct waves of volatility through the day. London is first then New York. There is a third lower wave late in New York which I attribute to profit taking and or swap avoiders. I hope this post will prove helpful to those of you following this thread.

Last but not least, I want to post a video of some young fellas take on Ed Sheeran's "I See Fire." They did a fantastic job. An analyst recently said in regard to Turkey lowering rates from this point " I don't think they want to play with fire." He must have a short memory.

Hi Scotty - another interesting post. However, I think you have a typo here.... .. The hours to watch closely are 16:00-20:00 GMT. This is late Asia and early London.
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Currently, in British Summer Time, the London Open is at 07:00 GMT (08:00 BST) so late Asia for me is say from the Frankfurt Open at 06:00 GMT which is now, as I am typing.....

I too have analysed the price action on an hourly basis, noting the time of turns and the range etc and either plotting this in a spreadsheet or just by hand in a notebook, which I do now to keep updated on a daily basis. I also take note of the spreads as these can have a big impact when looking at the hourly range - at Friday's close I was seeing a 44 pip spread!

PS I bought off the 2.0850 level just before FO....

Whilst waiting for the London Open, I have added an equal sloping and width up channel to my hourly chart - actually a Gann Angle 54 - so far we have a breakout from that bear flag and need London to confirm.....

Thank you for catching this. I usually track everything in Central Standard Time here in the US and quickly made the time conversions to the charts I posted today. I got it fixed.

In what part of the world do you find yourself today, Islander? I'm loving the palm trees.

We are currently approaching the 38.2 retrace zone of the fall we saw last week. I'm curious to if there will be real resistance or if that move was truly stop volatility and ultimately transitory.

I welcome debate and discussion about the fundamentals. I'm out on a limb at times I know, if anybody see's the Dollar/Lira from a different perspective I'm all ears. In a perfect world this thread would be the hedge fund board room where everyone gets their word in and we learn from each other and choose our trade direction as a majority vote. Might be interesting, just thinking out loud as it were.

Hello Sir Scotty and Sir Islander! Thanks for sharing your analyses here. I'm currently long on this pair awaiting at least 2.15 target in the next few weeks. The recent downtrend has hurt albeit on paper only Have a green pip trading week!

You're welcome.

The marina is Puerto Portals at 39º31'N 2º34'E and yesterday I had the 22m / 70ft motor yacht that I skipper hauled out in their boatyard - so a few days of hot and dirty work for me!

I will watch your fundamental discussions with interest and try to relate them to my own technical view.....as you said, now approaching the 38% retrace (IZ on my chart) with today's MR2 a couple of pips below and the high so far....

Looks like a gorgeous place! We are all jealous. Even with the dirty work.

I'm just hoping we continue onward and more importantly, upward. The New York dudes may want to blow right through that lower channel line--just for the hell of it too. Maybe Erdogan will help us out today berate Basci in front of lots of reporters. That'd sure be swell of him.