I know it's scary, and the reasons are clear. The Turkish Central Bank actions under high inflation and the response by the leadership has placed the financial market community in a rage and fear mode.
However, herd mentality does not always pay, and as shrewd investors, we should take a logical approach to the market. Use technique and a dose of common sense.
The USDTRY no doubt has declined in value 40% and during the month 20%. No doubt due to the fundamental state and the show stage.
The reality is, we have RSI 96.5 Daily chart, and way above the BB. The weekly chart same, RSI almost 92.0 and also way above the BB. The steepness of the move up is to sharp and steep, and no commodity, currency or anything that is traded, can remain being that way, unless the authorities change the currency and replace it with something else. However, this does not happen often, and in doing so, there will be an exchange of value to replace. Anyway, this is not what we should expect, and I feel the central bank may change course completely, and increase interest rates suddenly in large scale. During the time of the EMS the French central bank defended the Franc by raising interest rates to 1000%.
That is why, be careful in shorting the TRY as it can correct swiftly in the same magnitude as it has lost its value.
The true value is not current 12.65, and rather 10.05 is where it should go to and then the market can re-access the direction.
Strategy is simply, sell anywhere 12.00 - 13.00 in small increments and the average will pay-off big time. Remember, interest rates are still high and can increase without warning. Inflation is near 20% and having a real interest rate below inflation rate is uncommon.
The devaluation will help Turkey also to bring in tourist money as this is extremely cheap place to go on holiday now.
However, herd mentality does not always pay, and as shrewd investors, we should take a logical approach to the market. Use technique and a dose of common sense.
The USDTRY no doubt has declined in value 40% and during the month 20%. No doubt due to the fundamental state and the show stage.
The reality is, we have RSI 96.5 Daily chart, and way above the BB. The weekly chart same, RSI almost 92.0 and also way above the BB. The steepness of the move up is to sharp and steep, and no commodity, currency or anything that is traded, can remain being that way, unless the authorities change the currency and replace it with something else. However, this does not happen often, and in doing so, there will be an exchange of value to replace. Anyway, this is not what we should expect, and I feel the central bank may change course completely, and increase interest rates suddenly in large scale. During the time of the EMS the French central bank defended the Franc by raising interest rates to 1000%.
That is why, be careful in shorting the TRY as it can correct swiftly in the same magnitude as it has lost its value.
The true value is not current 12.65, and rather 10.05 is where it should go to and then the market can re-access the direction.
Strategy is simply, sell anywhere 12.00 - 13.00 in small increments and the average will pay-off big time. Remember, interest rates are still high and can increase without warning. Inflation is near 20% and having a real interest rate below inflation rate is uncommon.
The devaluation will help Turkey also to bring in tourist money as this is extremely cheap place to go on holiday now.