USDTRY technical outlook medium-term

The Turkish currency was very popular as it offers one of the highest interest rates (around 20%) and was stable for a few years due to explicit government intervention to keep it strong. Therefore huge inflows from hedge funds and Japanese housewives kept it on a high level but being basically severely overvalued – which it still is. Starting wave 3 up. Confirmed by the fact that we took out the wave 1 high and should make at least a 1.38 factor of wave 1 equaling 28 points, giving a target in the 1.42/3 area within 2 weeks. This week we broke above the TDST resistance line with a double bottom. A pullback of 24 – 38% should follow that’s 9-12 points but rather a shallow one before wave 5 comes into play. Thereby, the possibility that wave 3 has an magnitude of factor 1.618 is even more likely since Turkey is an emerging market with a smoother performance so far, which could change as the economy deteriorates and it’s geopolitical situation has an additional potential for sudden volatility. This would bring wave 3 to 1.48/50 area which is from other technical perspectives more likely.

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~ by behindthematrix on October 7, 2008.

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