Kumowizard

EURTRY - Trades at equilibrium level within the range

FX:EURTRY   Euro Fx/Turkish New Lira
35 0 2
EURTRY             is really interesting in more ways. First of all, TRY has one of the highest rate advantage, which means going short from time to time is really a nice positive carry. Looking at TRY denominated bonds, the yields for 1 year maturity for example range between 8,50 - 9,50 % p.a. (depending on the issuer).

However from time to time we have to face with an extremely volatile price action, as the extremely voltile price action. As we saw early this year, when things (e.g. political uncertanity) go wrong, TRY can really blow up, so through FX devaluation one can quickly loose the whole 1 year rate differential. Let's see how does it look like now?

Daily: Nothing "really special" we could say, since May it's been trading within 2,80 - 2,91 range. But we have to realise this range is almost 4 % wide! Technicals are mixed a bit. Price trading exactly at the equilibrium level, so ard the flat Kumo. We have a still intact downtrend line just above the Price. Slow Stoch is overbought, may give a sell signal soon, but MACD and DMI             are bullish . (Note: MACD is bit less useful when you look at a more volatile ccy pair.)
For now I see a 65 vs 55 % chance for a bearish move vs a bullish one above the cloud.

If I look at the ECB policy for the close future, TRY can be a really attractive ccy for investors who are looking for an alternative against EUR. At least the positive carry really favours them. Playing EURTRY             as a leveraged speculative position is not an easy game. But if one has some EUR savings to diversify, maybe at some point it worths to do conversion and buy a high yielding TRY denominated bond. Certanly a better risk-reward than the HUF             or PLN for example.

4 Hrs: It is in counter trend mode now, but the bullish momentum may decrease below 2,88.
Lower support to watch now is 2,8350.
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